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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: 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 October $42,000 54,000 November December Sales Cost of goods sold 68,000 59,000 Beginning inventory Purchases Cost of goods available for sale Less: Ending inventory Cost of goods sold $ 6,000 14,400 20,600 21,900 33,100 $43,800 58,400 $ 69,500 55,000 37,800 44,000 48,900 14,400) _(20,600) (21.900) (20,000) Gross profit Operating expenses Operating income $29,400 37,800 $ 47,600 35,000 $12,600 $ 16,200 $ 20,400 24,000 16,100 $ 2,100 3,400 6,100 7,900 12.800 14,300 1 10 10,500 12, 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
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