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    PrimeTime Sportswear: Prepare a cash budget

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    See attached file for the tables.

    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: 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 78%
    In the subsequent month 22%

    PrimeTime 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 June 30 is estimated to be $39,620. Collections of June 30 accounts receivable were estimated to be $20,420 in July and $15,280 in August. Payments of June 30 accounts payable and accrued expenses in July were estimated to be $23,820.

    (a) Prepare a cash budget for August and September. (Enter all amounts as positive value except for Beginning Ending cash which has to be indicated with a minus sign if it is negative amount. Leave no cells blank - be certain to enter "0" wherever required.)

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    Solution Preview

    See attached file for formulas.

    july august sep oct
    sales 42400 54200 67600 59100
    first month 20420 21200 27100 33800
    second month 15280 19080 24390 30420
    total cash ...

    Solution Summary

    The expert prepares a cash budget for PrimeTime Sportswear.