{"id":221833,"date":"2025-05-30T15:41:04","date_gmt":"2025-05-30T15:41:04","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=221833"},"modified":"2025-05-30T15:41:06","modified_gmt":"2025-05-30T15:41:06","slug":"a-prepare-a-merchandise-purchases-budget-for-july-august-and-september","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/05\/30\/a-prepare-a-merchandise-purchases-budget-for-july-august-and-september\/","title":{"rendered":"a. Prepare a merchandise purchases budget for July, August, and September"},"content":{"rendered":"\n<p>a. Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30. Beech Corporation Merchandise Purchases Budget July August September Total Budgeted cost of goods sold Total needs Required purchases<\/p>\n\n\n\n<p>2-b. Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and September. Also compute total cash disbursements for merchandise purchases for the quarter ended September 30. Total Beech Corporation Schedule of Cash Disbursements for Purchases July August September From accounts payable From July purchases From August purchases From September purchases Total cash disbursements $ 0 $ 0 $ 0 $ 0<\/p>\n\n\n\n<ol start=\"3\" class=\"wp-block-list\">\n<li>Prepare an income statement for the quarter ended September 30 using an absorption income statement format. Beech Corporation Income Statement For the Quarter Ended September 30<\/li>\n\n\n\n<li>Prepare a balance sheet as of September 30. Beech Corporation Balance Sheet September 30 Assets Total assets Liabilities and Stockholders&#8217; Equity Total liabilities and stockholders&#8217; equity $<\/li>\n<\/ol>\n\n\n\n<p>2-a. Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the<\/p>\n\n\n\n<ol start=\"3\" class=\"wp-block-list\">\n<li>Prepare an income statement for the quarter ended September 30 using an absorption income statement format. Beech Corporat<\/li>\n<\/ol>\n\n\n\n<p><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-ast-global-color-0-color\">The Correct Answer and Explanation is:<\/mark><\/strong><\/p>\n\n\n\n<p>To provide the <strong>Merchandise Purchases Budget<\/strong>, <strong>Schedule of Cash Disbursements<\/strong>, <strong>Income Statement<\/strong>, and <strong>Balance Sheet<\/strong> for <strong>Beech Corporation<\/strong>, I will need the following key inputs, which are typically part of the master budget problem:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Sales Budget<\/strong> \u2013 Budgeted sales for July, August, and September.<\/li>\n\n\n\n<li><strong>Cost of Goods Sold (COGS)<\/strong> percentage.<\/li>\n\n\n\n<li><strong>Inventory Policy<\/strong> \u2013 Desired ending inventory as a percentage of the next month\u2019s COGS.<\/li>\n\n\n\n<li><strong>Beginning Inventory<\/strong> for July.<\/li>\n\n\n\n<li><strong>Payment Terms<\/strong> \u2013 When and how merchandise purchases are paid (e.g., 50% in the month of purchase, 50% in the following month).<\/li>\n\n\n\n<li><strong>Operating expenses<\/strong>, selling &amp; administrative expenses, depreciation, tax rate, etc.<\/li>\n\n\n\n<li><strong>Beginning balances<\/strong> for cash, accounts receivable, inventory, accounts payable, and retained earnings.<\/li>\n<\/ol>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\">Since you haven&#8217;t provided those values yet, here&#8217;s a <strong>template with formulas<\/strong> for each component and a detailed <strong>300-word explanation<\/strong>. Once you provide the numbers, I\u2019ll fill in the actual answers.<\/h3>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>2-a. Merchandise Purchases Budget (Template)<\/strong><\/h2>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><th>Month<\/th><th>July<\/th><th>August<\/th><th>September<\/th><th>Total<\/th><\/tr><\/thead><tbody><tr><td>Budgeted COGS<\/td><td>= Sales \u00d7 COGS%<\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td>Add: Desired Ending Inventory<\/td><td>= Next Month COGS \u00d7 %<\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td>Total Needs<\/td><td>= COGS + Ending Inv<\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td>Less: Beginning Inventory<\/td><td>= Prior Ending Inv<\/td><td><\/td><td><\/td><td><\/td><\/tr><tr><td><strong>Required Purchases<\/strong><\/td><td>= Total Needs \u2013 Beg Inv<\/td><td><\/td><td><\/td><td>= SUM(July:Sept)<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>2-b. Cash Disbursements for Purchases (Template)<\/strong><\/h2>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><th>Month<\/th><th>July<\/th><th>August<\/th><th>September<\/th><th>Total<\/th><\/tr><\/thead><tbody><tr><td>From Accounts Payable<\/td><td>= % of June Purchases<\/td><td>= % of July Purchases<\/td><td>= % of August Purchases<\/td><td><\/td><\/tr><tr><td>From Current Purchases<\/td><td>= % of July Purchases<\/td><td>= % of August Purchases<\/td><td>= % of September Purchases<\/td><td><\/td><\/tr><tr><td><strong>Total Cash Disbursements<\/strong><\/td><td>= Sum above<\/td><td><\/td><td><\/td><td>= SUM(July:Sept)<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>3. Absorption Income Statement (Template)<\/strong><\/h2>\n\n\n\n<p><strong>Beech Corporation<\/strong><br><strong>Income Statement<\/strong><br><strong>For the Quarter Ended September 30<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><thead><tr><th>Description<\/th><th>Amount<\/th><\/tr><\/thead><tbody><tr><td>Sales Revenue<\/td><td><\/td><\/tr><tr><td>Less: Cost of Goods Sold<\/td><td><\/td><\/tr><tr><td><strong>Gross Margin<\/strong><\/td><td><\/td><\/tr><tr><td>Operating Expenses:<\/td><td><\/td><\/tr><tr><td>\u2013 Selling &amp; Admin Expenses<\/td><td><\/td><\/tr><tr><td>\u2013 Depreciation<\/td><td><\/td><\/tr><tr><td><strong>Operating Income<\/strong><\/td><td><\/td><\/tr><tr><td>Less: Interest\/Taxes<\/td><td><\/td><\/tr><tr><td><strong>Net Income<\/strong><\/td><td><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>4. Balance Sheet (Template)<\/strong><\/h2>\n\n\n\n<p><strong>Beech Corporation<\/strong><br><strong>Balance Sheet<\/strong><br><strong>As of September 30<\/strong><\/p>\n\n\n\n<p><strong>Assets<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Cash<\/li>\n\n\n\n<li>Accounts Receivable<\/li>\n\n\n\n<li>Inventory<\/li>\n\n\n\n<li>Equipment (net)<br><strong>Total Assets<\/strong><\/li>\n<\/ul>\n\n\n\n<p><strong>Liabilities and Stockholders\u2019 Equity<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Accounts Payable<\/li>\n\n\n\n<li>Common Stock<\/li>\n\n\n\n<li>Retained Earnings<br><strong>Total Liabilities &amp; Equity<\/strong><\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h2 class=\"wp-block-heading\"><strong> Explanation:<\/strong><\/h2>\n\n\n\n<p>The merchandise purchases budget is crucial for inventory planning and cash flow forecasting. It estimates the dollar amount of goods that must be purchased to meet sales demands and maintain the desired ending inventory. The formula begins with budgeted <strong>Cost of Goods Sold (COGS)<\/strong>, adds the desired <strong>ending inventory<\/strong>, and subtracts the <strong>beginning inventory<\/strong> to compute <strong>required purchases<\/strong>.<\/p>\n\n\n\n<p>Once the purchases budget is complete, the <strong>Schedule of Cash Disbursements<\/strong> translates those purchases into expected payments, considering payment terms (e.g., a portion paid in the current month and the rest in the following month). This step ensures that Beech Corporation anticipates sufficient cash availability to pay suppliers, maintaining healthy supplier relationships and avoiding late fees.<\/p>\n\n\n\n<p>The <strong>Absorption Income Statement<\/strong> includes all manufacturing costs (fixed and variable) in COGS and shows profitability based on gross margin. Operating expenses (like S&amp;A expenses and depreciation) are deducted to derive <strong>Operating Income<\/strong>. After accounting for taxes and interest, the <strong>Net Income<\/strong> provides an essential performance metric.<\/p>\n\n\n\n<p>Finally, the <strong>Balance Sheet<\/strong> offers a snapshot of the company\u2019s financial position at the end of the quarter. It lists current and long-term assets (e.g., cash, inventory, and equipment) and liabilities (e.g., accounts payable) alongside shareholders&#8217; equity. It confirms whether the business remains solvent and financially stable.<\/p>\n\n\n\n<p>These budgets and statements help Beech Corporation make informed decisions, manage cash effectively, and communicate financial expectations clearly to stakeholders.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" src=\"https:\/\/learnexams.com\/blog\/wp-content\/uploads\/2025\/05\/learnexams-banner7-124.jpeg\" alt=\"\" class=\"wp-image-221834\"\/><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>a. Prepare a merchandise purchases budget for July, August, and September. Also compute total merchandise purchases for the quarter ended September 30. Beech Corporation Merchandise Purchases Budget July August September Total Budgeted cost of goods sold Total needs Required purchases 2-b. Prepare a schedule of expected cash disbursements for merchandise purchases for July, August, and [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-221833","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/221833","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=221833"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/221833\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=221833"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=221833"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=221833"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}