Question
Asked by:
$8.00 ACCOUNTING HELP
- From Mathematics: General-Mathematics
- Closed, but you can still post tutorials
- Due on Dec. 16, 2008
- Asked on Dec 15, 2008 at 7:20:42PM
Q:Cash budget-Primetime sportswear is a custom imprinter that began operations six months ago. Sales have exceeded managements most optimistic projections. Sales are made on account and collected as follows: 60% in the month after the sale is made and 35% 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 70%
In the subsequent month .30%
Primetime sportswears income statement budget for each of the next four months, newly revised to reflect the success of the firm, follows:
July August September October
Sales $84,000 $108, 000 $136, 000 118,000
Cost of good sold
Beginning inventory $12,000 28,800 $41,200 43,800
Purchases 75,600 88,000 97,800 66,200
Cost of goods available for sale 87,600 116,800 139,000 110,000
Less: ending inventory (28,800) (41,200) (43,800) (40,000)
Cost of goods sold $58,800 75,600 95,200 70,000
Gross profit $25,200 32,400 40,800 48,000
Operating expenses 21,000 25,600 28,600 32,200
Operating income 4,200 6,800 12,200 15,800
Cash on hand June 30 is estimated to be 75,000. collections of June 30 accounts receivable were estimated to be 40,000 in July and 30,000 in august. Payments of June 30 accounts payable and accrued expenses in July were estimated to be 48,000.
a. prepare a cash budge for july
b. what is your advice to management of primetime sportswear
