Prime Time 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:

Prime Time Sportswear's income statement budget for each of the next four months, newly revised to reflect the success of the firm, follows:

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 $24.1100?
Required:
a. Prepare a cash budget for September.
b. What is your advice to management of Prime Time Sportswear?

In the month during which the merchandise is purchased or the cost is incurred.. In the subsequent month 75% 25% , September October November December Sales $ 42,000 S 54,000 $ 68,000 $59.000 Cast of goods sold S 6,000 37.800 Cost of goods available for sae 43,800 (14,400) $ 29,400 $ 12.600 Beginning inventory S 14.400 44.000 S 58.400 20.600) $ 37,800 S 16.200 12,800 S 3.400 5 20,600 48900 5 69,500 21,900) $ 47,600 S20,400 14,300 S 6,100 5 21,900 33,100 S 55,000 20.000) $35,000 S 24,000 16,100 7,900 Less: Ending inventory Cost of goods sold Gross profit Operating expenses Operating income S 2,100