Problem 14-20 Cash budget-part 2 LO 4, 8 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: h the merchandise is purchased or the costis incurred he subreguent month PrimeTime Sportswear's income statement budget for each of the next four months, newly revised to reflect the success of the firm, follows: October $54,000 November $67,600 September $ 41,200 December $ 59,000 Sales Cost of goods sold Beginning inventory Purchases $6,210 37,000 $14110 43,600 $ 20,290 48,800 22.160 33,100 ods available for sale (20.290) $37,420 $16,580 Less: Ending inventory Costof goods sold Gross profit (14.110) 3 29.100 (22,160) $ 46.930 (19,780) $35,480 23,520 12,100 20,670 penses 1,900 $3.680 7,120 $ 6,670 Operating income Cash on hand August 31 is estimated to be $39,730. Collections of August 31 accounts receivable were estimated to be $20,480 in September and $14,780 in October. Payments of August 31 accounts payable and accrued expenses in September were estimated to be $23,710. 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 Beginning cash August 31 acpounts receivable September sales October seles November sales September purchases October purchases November purchases September operaing expenses November operatng experses Total cash disbursements Ending cash 0 5 a-2. What are the prospects for this company if its sales growth continues at a similar rate? Prospects are good OProspects 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 Beginning cash Cash receipts October sales January sales Total cash recepts Cash dishursements November purchases December purchases Februery November operatng experses December operaing expenses January aperating expenses February operaing expenses dsbursements Ending cash