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 the cost is incurred In the subsequent month 75% 25% PrimeTime Sportswear's income statement budget for each of the next four months, newly revised to reflect the success of the firm, follows: September $ 41,800 October $ 53,600 November $ 68,100 December $ 58,800 Sales Cost of goods sold: Beginning inventory Purchases Cost of goods available for sale Less: Ending inventory Cost of goods sold Gross profit Operating expenses Operating income $ 5,780 37,300 $ 43,080 (14,430) $ 28,650 $ 13,150 10,400 $ 2,750 $ 14,430 43,900 $ 58,330 (20,710) $ 37,620 $ 15,980 12,600 $ 3,380 $ 20,710 48,600 $ 69, 310 (22,260) $ 47,050 $ 21,050 14,400 $ 6,650 $ 22,260 32,900 $ 55,160 (20, 490) $ 34,670 $ 24, 130 16,000 $ 8,130 Cash on hand August 31 is estimated to be $40,110. Collections of August 31 accounts receivable were estimated to be $17,350 in September and $15,230 in October. Payments of August 31 accounts payable and accrued expenses in September were estimated to be $24,490. Required: a-1. Prepare a cash budget for October and November. (Beginning cash should be indicated with a minus sign if it is a negative amount.) October November $ 0 $ 0 Beginning cash Cash receipts: August 31 accounts receivable September sales October sales November sales Total cash receipts Cash disbursements: September purchases October purchases November purchases September operating expenses October operating expenses November operating expenses Total cash disbursements Ending cash $ 0 $ 0 $ 0 $ 0 b-1. Assume now that PrimeTime Sportswear is a mature firm, and that the September-November data represent a seasonal peak in business. Prepare a cash budget for December, January, and February, assuming that the income statements for January and February are the same as December's. (Beginning cash should be indicated with a minus sign if it is a negative amount.) December January February Beginning cash Cash receipts: October sales $ 0 $ 0 $ 0 November sales December sales January sales Total cash receipts Cash disbursements: November purchases December purchases January purchases February purchases November operating expenses December operating expenses January operating expenses February operating expenses Total cash disbursements Ending cash $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
