Question
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
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: 49% in the month after the sale is made and 44% 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 | 75 | % |
In the 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:
September | October | November | December | ||||||||||||
Sales | $ | 41,800 | $ | 53,700 | $ | 68,100 | $ | 58,900 | |||||||
Cost of goods sold: | |||||||||||||||
Beginning inventory | $ | 5,530 | $ | 14,600 | $ | 20,310 | $ | 22,050 | |||||||
Purchases | 37,800 | 43,700 | 49,000 | 32,600 | |||||||||||
Cost of goods available for sale | $ | 43,330 | $ | 58,300 | $ | 69,310 | $ | 54,650 | |||||||
Less: Ending inventory | (14,600 | ) | (20,310 | ) | (22,050 | ) | (20,360 | ) | |||||||
Cost of goods sold | $ | 28,730 | $ | 37,990 | $ | 47,260 | $ | 34,290 | |||||||
Gross profit | $ | 13,070 | $ | 15,710 | $ | 20,840 | $ | 24,610 | |||||||
Operating expenses | 10,400 | 13,100 | 14,300 | 16,000 | |||||||||||
Operating income | $ | 2,670 | $ | 2,610 | $ | 6,540 | $ | 8,610 | |||||||
Cash on hand August 31 is estimated to be $40,240. Collections of August 31 accounts receivable were estimated to be $19,820 in September and $15,330 in October. Payments of August 31 accounts payable and accrued expenses in September were estimated to be $23,840.
cash on hand August 31 is to be $40,240. Collections of August 31 accounts receivable were estimated to be $18.820 in September and s15,330 in accrued expenses in September were estimated to be $23,840. Required: Prepare a cash budget for october and November. (Beginning cash should be Indlcated with a minus sign if it is a negative amount) October November Beginning cash 36,220 Cash receipts: August 31 accounts receivable 15,330 September sales October sales November sales S 15,330 Total cash receipts Cash disbursements: September purchases October purchases November purchases September operating expenses October operating expenses November operating expenses 0 Total cash disbursements 51,550 Ending cash HEp... a-2. What are the prospects for this company if its sales growth continues at a similar rateStep by Step Solution
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