Transcribed Image Text: PrimeTime Sportswear is a custom imprinter that began operations six months ago. Sales have exceeded management’s most optimistic projections. Sales are made

Transcribed Image Text: 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
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
$ 42,100
October
November
December
Sales
$ 53,700
$ 67,600
$ 59,300
Cost of goods sold:
$ 14,380
$ 20,110
Beginning inventory
Purchases
$ 5,530
38,100
$ 43,630
(14,380)
$ 29,250
$ 12,850
$ 22,390
48,900
$ 69,010
43,900
$ 58,280
(20,110)
$ 38,170
$ 15,530
13,000
$ 2,530
33,500
$ 55,890
(20,080)
$ 35,810
$ 23,490
16,500
$ 6,990
Cost of goods available for sale
Less: Ending inventory
Cost of goods sold
(22,390)
$ 46,620
$ 20,980
14, 200
$ 6,780
Gross profit
Operating expenses
10,500
Operating income
$ 2,350
Cash on hand August 31 is estimated to be $39,730. Collections of August 31 accounts receivable were estimated to be
$16,530 in September and $14,920 in October. Payments of August 31 accounts payable and accrued expenses in
September were estimated to be $24,430.
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.)
Answer is complete but not entirely correct.
October
November
Beginning cash
(4,570) 8 $ (23,004) 8
Cash receipts:
August 31 accounts receivable
14,920 O
September sales
21,471 O
19,366 O
October sales
27,387 O
November sales
Total cash receipts
$ 36,391
2$
46,753
Cash disbursements:
September purchases
$ 9,525 O $
October purchases
32,925 O
10,975 O
November purchases
36,675 O
September operating expenses
2,625 O
October operating expenses
9,750 O
3.250 O
November operating expenses
10,650 O
Total cash disbursements
$ 54.825
$
61,550
Ending cash
$(23,004)
$ (37,801) Transcribed Image Text: 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.)
Answer is not complete.
December
January
February
Beginning cash
Cash receipts:
October sales
November sales
December sales
January sales
Total cash receipts
Cash disbursements:
November purchases
2$
December purchases
January purchases
February purchases
November operating expenses
December operating expenses
January operating expenses
February operating expenses
Total cash disbursements
Ending cash
$
$
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