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 77% 23% PrimeTime Sportswear's income statement budget for each of the next four months, newly revised to reflect the success of the firm, follows: September $ 41,600 October $ 54,300 November $ 68,200 December $ 59,000 Sales Cost of goods sold: Beginning inventory $ 6,360 $ 14,640 $ 20,530 $ 21,750 Purchases 37,100 Cost of goods available for sale 48,700 $ 69,230 Less: Ending inventory $ 43,460 (14,640) $ 28,820 $ 12,780 44,300 $ 58,940 (20,530) $ 38,410 $ 15,890 Cost of goods sold (21,750) $ 47,480 $ 20,720 14,600 33,100 $ 54,850 (20,420) $ 34,430 $ 24,570 16,700 7,870 Gross profit Operating expenses 10,900 12,400 3,490 Operating income. $ 1,880 $ 6,120 $ Cash on hand August 31 is estimated to be $40,490. Collections of August 31 accounts receivable were estimated to be $18,340 in September and $14,710 in October. Payments of August 31 accounts payable and accrued expenses in September were estimated to be $23,950. 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.) 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 $ 34,880 Cash receipts: August 31 accounts receivable September sales October sales November sales Total cash receipts $ 0 Cash disbursements: September purchases October purchases November purchases September operating expenses October operating expenses November operating expenses $ 0 Total cash disbursements Ending cash $ 0 0 $ 0 $ $ 34,880 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 November sales December sales January sales Total cash receipts $ 0 $ 0 $ 0 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 $ 0 $ 0 $ $ 0 $ 0 $ 0 0
