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: 51% in the month after the sale is made and 46% 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 73% 27% PrimeTime Sportswear's Income statement budget for each of the next four months, newly revised to reflect the success of the firm, follows: September $ 41,900 October $ 54,000 November $ 68,300 December $ 58,680 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 $ 6,460 38,500 $ 44,960 (14,750) $ 30,210 $ 11,690 12,400 $ 1,299 $ 14,750 43,800 $ 58,550 (21,060) $ 37,490 $ 16,510 12,400 $ 4,119 $ 21,860 49,100 $ 70,160 (21,898) $ 48,270 $ 20,30 14,680 $ 5,430 $ 21,898 33,400 $ 55,298 (20,440) $ 34,850 $ 23,758 16, 20e $ 7,550 Cash on hand August 31 is estimated to be $39.920. Collections of August 31 accounts receivable were estimated to be $16.990 In September and $15,200 in October. Payments of August 31 accounts payable and accrued expenses in September were estimated to be $23,660. 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 21,369 19,274 27,540 S 21,369 S 48,814 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 S S 0 0 21,369 S S 46,814 --2. What are the prospects for this company if its sales growth continues at a similar rate? Prospects are good Prospects are not good 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 S 0 S 0 S 0 Beginning cash Cash receipts. October sales 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 S 0 S 0 S 0 S 0 S 0 S 0 b-2. Can the cash budget be used to support a request to a bank for a seasonal loan