Prime Time Sportswear is a custom imprinter that began operations six months ago. Sales have exceeded management's most optimistic projections. Sales are made on account and collected as follows: 50% in the month after the sale is made and 45% in the second month after sale. Merchandise purchases and operating expenses are paid as follows:

Prime Time Sportswear's income statement budget for each of the next four months, newly revised to reflect the success of the firm, follows:

Cash on hand August 31 is estimated to be $40.000. Collections of August 31 accounts receivable were estimated to be $20,000 in September and $15,000 in October. Payments of August 31 accounts payable and accrued expenses in September were estimated to be $24.1100?
Required:
a. Prepare a cash budget for September.
b. What is your advice to management of Prime Time Sportswear?

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In the month during which the merchandise is purchased or the cost is incurred.. In the subsequent month 75% 25% , September October November December Sales $ 42,000 S 54,000 $ 68,000 $59.000 Cast of goods sold S 6,000 37.800 Cost of goods available for sae 43,800 (14,400) $ 29,400 $ 12.600 Beginning inventory S 14.400 44.000 S 58.400 20.600) $ 37,800 S 16.200 12,800 S 3.400 5 20,600 48900 5 69,500 21,900) $ 47,600 S20,400 14,300 S 6,100 5 21,900 33,100 S 55,000 20.000) $35,000 S 24,000 16,100 7,900 Less: Ending inventory Cost of goods sold Gross profit Operating expenses Operating income S 2,100