Question

Required Information [The following information applies to the questions displayed below) Beech Corporation is a merchandising company that is preparing a master budget for the third quarter of the calendar year. The company's balance sheet as of June 30th is shown below. Beech Corporation Balance Sheet June 30 Assets Cash Accounts receivable Inventory Plant and equipment, net of depreciation Total assets Liabilities and Stockholders Equity Accounts payable Comon stock Retained earnings Total liabilities and stockholders' equity $ 30,000 135.000 41.250 211.000 $ 467,250 5 72.000 345.00 50,250 $ 467.250 Beech's managers have made the following additional assumptions and estimates 1 Estimated sales for July August September, and October will be $220.000, $240.000, 5230,000, and $250.000, respectively 2. All sales are on credit and all credit sales are collected Each month's credit sales are collected 35% in the month of sale and 65 in the month following the sale All of the accounts receivable at June 30 will be collected in July 3. Each month's ending inventory must equal 25% of the cost of next month's sales The cost of goods sold is 75% of sales. The company pays for 40% of its merchandise purchases in the month of the purchase and the remaining 60% in the month following the purchase. All of the accounts payable at June 30 will be paid in July 4. Monthly selling and administrative expenses are always $40,000. Each month $6,000 of this total amount is depreciation expense and the remaining $34.000 relates to expenses that are paid in the month they are incurred 5. The company does not plan to borrow money or pay or declare dividends during the quarter ended September 30. The company does not plan to issue any common stock or repurchase its own stock during the quarter ended September 30 Required: 1 Prepare a schedule of expected cash collections for July, August and September 2-. Prepare a merchandise purchases budget for July August and September. Also compute total merchandise purchases for the Cuorter ended September 30 2-5 Pleoare a schedule of expected cass ursements for merchandise purchases for July August, and September 3. Prepare ancome statement that computes net operating income for the quarter endea September 30. 4 Prepare a balance sheet as of September 30

please answer question 4 showing steps on how to add/subtract to get the cash balance, and account payable. thanks

Answer 1

Entire answer has been given since it helps in understanding in flow of information

Sales Budget July $220,000 August $240,000 September $230,000 Quarter $690,000 Budgeted Sales (value) 1. Expected Cash Collection August September July $135,000 $77,000 Quarter $135,000 $220,000 June Month-Opening balance July Month August Month September Month Total Collection from Customers $143,000 $84,000 $156,000 $80,500 $236,500 $80,500 $675,500 $212,000 $227,000 COGS Sales COGS - 75% July $220,000 $165,000 August $240,000 $180,000 September $230,000 $172,500 Quarter | October $690,000 $250,000 $517,500 $187,500 2.a) Inventory Purchase Budget Budgeted COGS Add: Closing inventory - (25% of next month COGS) Total Requirement Less: Opening Inventory Purchase Budget Closing stock of month will be opening stock of next month September Closing stock = October COGS * 25% July $165,000 $45,000 $210,000 $41,250 $168,750 August $180,000 $43,125 $223,125 $45,000 $178,125 September $172,500 $46,875 $219,375 $43,125 $176,250 Quarter $517,500 $46,875 $564,375 $41,250 $523,125 2.b) Expected Cash disbursements for Materials Purchases August September Quarter July $72,000 $67,500 June Purchase July Purchase August Purchase September Purchase Total purchase payment to Vendors $101,250 $71,250 $106,875 $70,500 $177,375 $168,750 $178,125 $70,500 $417,375 $139,500 $172,500 Selling and administration expenses Selling and administration expenses in Cash Depreciation Total Selling and administration expenses July $34,000 $6.000 $40,000 August $34,000 $6,000 $40,000 September $34,000 $6,000 $40,000 Quarter $102,000 $18,000 $120,000 July $80,000 $212,000 $292,000 August $118,500 $227,000 $345,500 September $139,000 $236,500 $375,500 Quarter $80,000 $675,500 $755,500 Cash Budget Opening Balance Add: cash collections Total cash available Less: cash disbursements For inventory purchase For selling and administrative expense excluding depreciation Total cash disbursement Closing balance Cash $139,500 $34,000 $173,500 $118,500 $172,500 $34,000 $206,500 $139,000 $177,375 $34,000 $211,375 $164,125 $489,375 $102,000 $591,375 $164,125 Beech Corporation Budgeted Income Statement for September 30th Sales Less: Cost of Goods sold Gross Margin Operating expenses Selling and administrative expense Net Operating Income $690,000 $517,500 $172,500 $120,000 $52,500 $164,125 $149,500 $46,875 Beech Corporation Budgeted Balance Sheet for September 30th Assets Cash Accounts receivable Inventory Buildings and equipment Less: Depreciation during the Quarter Total Assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained Earnings Total Liabilities and Stockholders' Equity $211,000 $18,000 $553,500 $105,750 $345,000 $102,750 $553,500 Retained Earnings balance Opening balance Add: Net profit Closing balance of Retained earnings $50,250 $52,500 $102,750 Working notes: Accounts receivable closing balance Opening Balance Add : Sales Less: Collection Closing Balance $135,000 $690,000 -$675,500 $149,500 Accounts payable closing balance Opening Balance Add: Purchases Less: Payment Closing Balance $72,000 $523,125 -$489,375 $105,750