Please complete all the requirements ### Merchandise Purchases Budget AnalysisThe goal of this exercise is to create a merchandise purchases budget for the months of July, August, and September, and to calculate the total merchandise purchases for the quarter ending September 30.#### Budget Details**July:**- **Budgeted cost of goods sold:** $224,000- **Add: Desired ending merchandise inventory:** $63,750- **Total needs:** $303,750- **Less: Beginning merchandise inventory:** $56,000- **Required purchases:** $247,750**August:**- **Budgeted cost of goods sold:** $238,000- **Add: Desired ending merchandise inventory:** $61,875- **Total needs:** $316,875- **Less: Beginning merchandise inventory:** $63,750- **Required purchases:** $253,125**September:**- **Budgeted cost of goods sold:** $231,000- **Add: Desired ending merchandise inventory:** $65,625- **Total needs:** $313,125- **Less: Beginning merchandise inventory:** $61,875- **Required purchases:** $251,250**Quarter:**- **Budgeted cost of goods sold:** $693,000- **Add: Desired ending merchandise inventory:** Error (does not sum correctly)- **Total needs:** Error (does not sum correctly)- **Less: Beginning merchandise inventory:** Error (does not match total)- **Required purchases:** $752,125 (appears incorrect based on previous month calculations)### Explanation- **Checkmarks and Crosses:** The green checkmarks indicate correct entries, whereas red crosses indicate errors in the computed values. Specifically, errors are present in August and September's desired ending inventory, total needs, beginning inventory, and the quarter totals. - **Purpose:** This budget preparation helps in planning for merchandise purchases to ensure inventory levels meet sales requirements while minimizing excess inventory holding costs.### NoteThe errors in calculation need to be revised for accuracy. Total amounts should align with sum calculations from the monthly figures. ### Beech Corporation Financial OverviewBeech Corporation, a merchandising company, is creating a master budget for the third quarter. Below is the balance sheet as of June 30th.#### Balance Sheet (June 30)**Assets:**- Cash: $73,000- Accounts Receivable: $125,000- Inventory: $56,000- Plant and Equipment, net of depreciation: $221,000**Total Assets:** $475,000**Liabilities and Stockholders’ Equity:**- Accounts Payable: $82,000- Common Stock: $309,000- Retained Earnings: $84,000**Total Liabilities and Stockholders’ Equity:** $475,000### Exercise 8-12 (Algo)Beech's managers have made the following assumptions and estimates:1. **Estimated Sales:** - July: $320,000 - August: $340,000 - September: $330,000 - October: $350,0002. **Credit Sales Collection:** - All sales are on credit, with collections at 35% in the month of sale, and 65% in the following month. All accounts receivable at June 30 will be collected in July.3. **Inventory and Purchases:** - Ending inventory must equal 25% of the next month’s sales cost. - Cost of goods sold is 70% of sales. - 40% of merchandise purchases are paid in the purchase month, and 60% in the following month. - Accounts payable at June 30 will be paid in July.4. **Monthly Expenses:** - Selling and administrative expenses are $40,000, with $6,000 allocated to depreciation. - The rest relates to expenses paid in the incurred month.5. **Financing and Stock Plans:** - The company does not intend to borrow money, pay, or declare dividends during the quarter ending September 30. - No plans to issue or repurchase common stock during this period.This detailed budget preparation helps in managing financial expectations and planning for the third quarter.

Budgeting is the process of estimating future operations based on past performance. % are estimated…

Beech Corporation is a merchandising company that is preparing a master budget for the third quarter. The company's balance sheet as of June 30th is shown below: Assets Cash Beech Corporation Balance Sheet June 30 Accounts receivable Inventory Plant and equipment, net of depreciation Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders' equity Exercise 8-12 (Algo) $ 73,000 125,000 56,000 221,000 $ 475,000 $ 82,000 309,000 84,000 $ 475,000 Beech's managers made the following additional assumptions and estimates: 1. Estimated sales for July, August, September, and October will be $320,000, $340,000, $330,000, and $350,000, 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 70% 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.

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter8: Budgeting

Section: Chapter Questions

Problem 20E