Budgeted sales revenue for the coming five months is as follows:

Month	Sales revenue
August	$110,000
September	$110,000
October	$195,000
November	$135,000
December	$185,000

You estimate that you will collect35% of sales revenue in the month of sale,40% in the following month,20% two months after the sale, and the remaining5% three months after the sale.

Required:

a) Compute budgeted cash inflows for November and December.

November = $

December = $

(Hint: pay attention to the timing, e.g. "40% is collected in the following month" means40% of August revenue is collected in September, i.e., cash receipts (inflows) for September include40% ofpreviousmonth's sales revenue.)

b) Is it possible for a firm to run out of cash even though it is profitable? If no, explain why not, if yes, give an example of how that can happen.