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: $48\%$ in the month after the sale is made and $43\%$ 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 $78\%$

In the subsequent month $22\%$

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

July August September October

Sales $ $41,700$ $ $54,200$ $ $68,400$ $ $59,400$

Cost of goods sold:

Beginning inventory $ $6,230$ $ $14,720$ $ $20,770$ $ $22,330$

Purchases $37,80043,60049,40033,000$

Cost of goods available for sale $ $44,030$ $ $58,320$ $ $70,170$ $ $55,330$

Less: Ending inventory $(14,720)(20,770)(22,330)(20,270)$

Cost of goods sold $ $29,310$ $ $37,550$ $ $47,840$ $ $35,060$

Gross profit $ $12,390$ $ $16,650$ $ $20,560$ $ $24,340$

Operating expenses $10,20013,20014,90016,700$

Operating income $ $2,190$ $ $3,450$ $ $5,660$ $ $7,640$

Cash on hand June $30$ is estimated to be $$40,310.$ Collections of June $30$ accounts receivable were estimated to be $$17,030$ in July and $$15,070$ in August. Payments of June $30$ accounts payable and accrued expenses in July were estimated to be $$24,170.$

Required:

Prepare a cash budget for August and September.

What are the prospects for this company if its sales growth continues at a similar rate?

Assume now that PrimeTime Sportswear is a mature firm, and that the July to September data represent a seasonal peak in business. Prepare a cash budget for October, November, and December, assuming that the income statements for November and December are the same as October's.

Can the cash budget be used to support a request to a bank for a seasonal loan?