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Cash Budget

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1.       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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 90,000 Accounts receivable . . . . . . . . . . . . . .. . . 136,000 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,000 Plant and equipment, net of depreciation . . . . . . . . . . . . . . 210,000 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . $ 498,000 Liabilities and Stockholders’ Equity Accounts payable . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . $ 71,100 Common stock . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . 327,000 Retained earnings . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . 99,900 Total liabilities and stockholders’ equity . . . . . . . . .. . . . . . . $ 498,000 Beech’s managers have made the following additional assumptions and estimates: 1.       Estimated sales for July, August, September, and October will be $ 210,000, $ 230,000, $220,000, and $ 240,000, respectively. 2.       All sales are on credit and all credit sales are collected. Each month’s credit sales are collected 45% in the month of sale and 55% 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 20% of the cost of next month’s sales. The cost of goods sold is 60% of sales. Required: Using the new assumptions described above, complete the following requirements: 1.                         Prepare a schedule of expected cash collections for July, August, and September. Also compute total cash collections for the quarter ended September 30. Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30.