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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 PrimeTime Sportswear's income statement budget for each of the next four months, newly revised to reflect the success of the firm, follows: Sales Cost of goods sold: Beginning inventory Purchases Cost of goods available for sale Less: Ending inventory July $ 42,000 $ 6,160 37,600 $ 43,760 (14,710) August $ 53,700 70% 30% $ 14,710 44,000 $ 58,710 (20,460) September $ 67,600 $ 20,460 49,200 $ 69,660 (22,420) October $ 58,700 $ 22,426 33,000 $ 55,420 (20,280

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 PrimeTime Sportswear's income statement budget for each of the next four months, newly revised to reflect the success of the firm, follows: Sales Cost of goods sold: Beginning inventory Purchases Cost of goods available for sale Less: Ending inventory July $ 42,000 $ 6,160 37,600 $ 43,760 (14,710) August $ 53,700 70% 30% $ 14,710 44,000 $ 58,710 (20,460) September $ 67,600 $ 20,460 49,200 $ 69,660 (22,420) October $ 58,700 $ 22,426 33,000 $ 55,420 (20,280

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Sportswe 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 PrimeTime Sportswear's income statement budget for each of the next four months, newly revised to reflect the success of the firm, follows: 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 July $ 42,000 $ 6,160 37,600 $ 43,760 (14,710) $29,050 $ 12,950 10,900 $ 2,050 August $ 53,700 70% 30% $ 14,710 44,000 $ 58,710 (20,460) $ 38,250 $ 15,450. 12,400 $ 3,050 September $ 67,600 $ 20,460 49,200 $ 69,660 (22,420) $ 47,240 $ 20,360 14,600 $ 5,760 October $ 58,700 $ 22,420 33,000 $ 55,420 (20,280) $ 35,140 23,560 15,800 $ 7,760 Cash on hand June 30 is estimated to be $40,420. Collections of June 30 accounts receivable were estimated to be $18,310 in July and $15,250 in August. Payments of June 30 accounts payable and accrued expenses in July were estimated to be $24,070. Required: a. 1. Prepare a cash budget for August and September. 2. What are the prospects for this company if its sales growth continues at a similar rate? h 1 Accuma now that PrimeTime Sportswear ic a mature firm and that the lulu to Sentembar data renresent a seasonal
Transcribed Image Text:Sportswe 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 PrimeTime Sportswear's income statement budget for each of the next four months, newly revised to reflect the success of the firm, follows: 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 July $ 42,000 $ 6,160 37,600 $ 43,760 (14,710) $29,050 $ 12,950 10,900 $ 2,050 August $ 53,700 70% 30% $ 14,710 44,000 $ 58,710 (20,460) $ 38,250 $ 15,450. 12,400 $ 3,050 September $ 67,600 $ 20,460 49,200 $ 69,660 (22,420) $ 47,240 $ 20,360 14,600 $ 5,760 October $ 58,700 $ 22,420 33,000 $ 55,420 (20,280) $ 35,140 23,560 15,800 $ 7,760 Cash on hand June 30 is estimated to be $40,420. Collections of June 30 accounts receivable were estimated to be $18,310 in July and $15,250 in August. Payments of June 30 accounts payable and accrued expenses in July were estimated to be $24,070. Required: a. 1. Prepare a cash budget for August and September. 2. What are the prospects for this company if its sales growth continues at a similar rate? h 1 Accuma now that PrimeTime Sportswear ic a mature firm and that the lulu to Sentembar data renresent a seasonal
Required: a. 1. Prepare a cash budget for August and September. 2. What are the prospects for this company if its sales growth continues at a similar rate? b. 1. Assume now that PrimeTime Sportswear is a mature firm, and that the July to September data represent a seasonal peak in business. Prepare a cash budget for October, November, and December, assuming that the income statements for November and December are the same as October's. 2. Can the cash budget be used to support a request to a bank for a seasonal loan? Complete this question by entering your answers in the tabs below. Required A1 Required A2 Required B1 Required B2 Prepare a cash budget for August and September. Note: Beginning cash should be indicated with a minus sign if it is a negative amount. August September Beginning cash Cash receipts: June 30 accounts receivable July sales August sales September sales Tutal auch rarainte Show Transcribed Text Required A1 Required A2 Required B1 Required B2 Beginning cash Cash receipts: June 30 accounts receivable July sales August sales September sales Total cash receipts Cash disbursements: July purchases August purchases September purchases July operating expenses August operating expenses September operating expenses. Total cash disbursements Ending cash Prepare a cash budget for August and September. Note: Beginning cash should be indicated with a minus sign if it is a negative amount. September 0 $ August $ $ $ 0 Ċ 0 $ < Required A1 0 $ 0 $ 0 0 0 Required A2 >
Transcribed Image Text:Required: a. 1. Prepare a cash budget for August and September. 2. What are the prospects for this company if its sales growth continues at a similar rate? b. 1. Assume now that PrimeTime Sportswear is a mature firm, and that the July to September data represent a seasonal peak in business. Prepare a cash budget for October, November, and December, assuming that the income statements for November and December are the same as October's. 2. Can the cash budget be used to support a request to a bank for a seasonal loan? Complete this question by entering your answers in the tabs below. Required A1 Required A2 Required B1 Required B2 Prepare a cash budget for August and September. Note: Beginning cash should be indicated with a minus sign if it is a negative amount. August September Beginning cash Cash receipts: June 30 accounts receivable July sales August sales September sales Tutal auch rarainte Show Transcribed Text Required A1 Required A2 Required B1 Required B2 Beginning cash Cash receipts: June 30 accounts receivable July sales August sales September sales Total cash receipts Cash disbursements: July purchases August purchases September purchases July operating expenses August operating expenses September operating expenses. Total cash disbursements Ending cash Prepare a cash budget for August and September. Note: Beginning cash should be indicated with a minus sign if it is a negative amount. September 0 $ August $ $ $ 0 Ċ 0 $ < Required A1 0 $ 0 $ 0 0 0 Required A2 >
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