Question
PART ONE COMPLETED - NEED HELP WITH PART TWO PrimeTime Sportswear is a custom imprinter that began operations six months ago. Sales have exceeded management's
PART ONE COMPLETED - NEED HELP WITH PART TWO | ||||
PrimeTime 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: In the month during which the merchandise is purchased or cost is incurred: 75% In subsequent month 25% | ||||
PrimeTime Sportswear's income statement budget for each of the next four months, newly revised to reflect the success of the firm, follows: Sept Oct Nov Dec | ||||
Sales | $42,000 | $54,000 | $68,000 | $59,000 |
Cost of goods sold: | ||||
Beginning inventory | $6,000 | $14,400 | $20,600 | $21,900 |
Purchases | 37800 | 44000 | 48900 | 33100 |
Cost of goods available for sale | $43,800 | $58,400 | $69,500 | $55,000 |
Less: Ending inventory | -14,400 | -20600 | -21900 | -20000 |
Cost of goods sold | $29,400 | $37,800 | $47,600 | $35,000 |
Gross profit | $12,600 | $16,200 | $20,400 | $24,000 |
Operating expenses | 10500 | 12800 | 14300 | 16100 |
Operating income | $2,100 | $3,400 | $6,100 | $7,900 |
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 $24,000. | ||||
PART ONE | ||||
Oct | Nov | |||
Beginning cash | -225 | -18900 | ||
Cash receipts: | ||||
Aug 31 Accounts receivable | 15000 | 0 | ||
Sept sales | 21000 | 18900 | ||
Oct sales | 0 | 27000 | ||
Nov sales | 0 | 0 | ||
Total cash receipts | 36000 | 45900 | ||
cash dispersements: | ||||
Sept purchases | 9450 | 0 | ||
Oct purchases | 33000 | 11000 | ||
Nov Purchases | 0 | 36675 | ||
Sept Operating expenses | 2625 | 0 | ||
Oct Operating expenses | 9600 | 3200 | ||
Nov Operating expenses | 0 | 10725 | ||
Total cash dispersements | 54675 | 61600 | ||
Ending cash | -18900 | -34600 | ||
Assume now that PrimeTime Sportswear is a mature firm, and that the September |
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