Cash Budget Khloe Company imports gift items from overseas and sells them to gift shops and department stores throughout the United State: Khloe Company provided the following information: a. The October 31 balance in the cash account is $53,890. b. All sales are on account. Sales in September were $980,000 and in October were $1,280,000. c. November sales are expected to be $2,180,000. d. In Khloe's experience, 70 percent of sales are collected in the month of sale and 28 percent are collected in the month followin sale. The remaining credit sales are uncollectible. e. Khloe purchases all merchandise on account. Purchases in September were $710,000 and in October were $950,000. Novemb- purchases are expected to be $2,000,000 as Khloe prepares for the Christmas buying season. Fifteen percent of purchases are paid in the month of purchase, while the remainder is paid in the month following the purchase month. f. Khloe Company has nine employees who are paid a total of $40,000 per month. Due to timing issues, about 90 percent of tota wages are paid in the month earned and the remaining 10 percent are paid in the following month. g. Rent for office and warehouse space is $11,500 paid monthly in cash. h. Utilities average $5,800 per month and are paid in cash. i. In November, Khloe expects to pay employment taxes of $6,875. j. Since Khloe imports product from overseas, customs duty and shipping to the central location of 15 percent of current month purchase cost must be paid in the month of purchase. k. Other cash expenses for November are expected to be $40,000. Required: Prepare a cash budget for Khloe Company for the month of November. Khloe Company Cash Budget For the Month of November
Cash Budget Khloe Company imports gift items from overseas and sells them to gift shops and department stores throughout the United State: Khloe Company provided the following information: a. The October 31 balance in the cash account is $53,890. b. All sales are on account. Sales in September were $980,000 and in October were $1,280,000. c. November sales are expected to be $2,180,000. d. In Khloe's experience, 70 percent of sales are collected in the month of sale and 28 percent are collected in the month followin sale. The remaining credit sales are uncollectible. e. Khloe purchases all merchandise on account. Purchases in September were $710,000 and in October were $950,000. Novemb- purchases are expected to be $2,000,000 as Khloe prepares for the Christmas buying season. Fifteen percent of purchases are paid in the month of purchase, while the remainder is paid in the month following the purchase month. f. Khloe Company has nine employees who are paid a total of $40,000 per month. Due to timing issues, about 90 percent of tota wages are paid in the month earned and the remaining 10 percent are paid in the following month. g. Rent for office and warehouse space is $11,500 paid monthly in cash. h. Utilities average $5,800 per month and are paid in cash. i. In November, Khloe expects to pay employment taxes of $6,875. j. Since Khloe imports product from overseas, customs duty and shipping to the central location of 15 percent of current month purchase cost must be paid in the month of purchase. k. Other cash expenses for November are expected to be $40,000. Required: Prepare a cash budget for Khloe Company for the month of November. Khloe Company Cash Budget For the Month of November
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Transcribed Image Text:Cash Budget
Khloe Company imports gift items from overseas and sells them to gift shops and department stores throughout the United States.
Khloe Company provided the following information:
a. The October 31 balance in the cash account is $53,890.
b. All sales are on account. Sales in September were $980,000 and in October were $1,280,000.
c. November sales are expected to be $2,180,000.
d. In Khloe's experience, 70 percent of sales are collected in the month of sale and 28 percent are collected in the month following
sale. The remaining credit sales are uncollectible.
e. Khloe purchases all merchandise on account. Purchases in September were $710,000 and in October were $950,000. November
purchases are expected to be $2,000,000 as Khloe prepares for the Christmas buying season. Fifteen percent of purchases are
paid in the month of purchase, while the remainder is paid in the month following the purchase month.
f. Khloe Company has nine employees who are paid a total of $40,000 per month. Due to timing issues, about 90 percent of total
wages are paid in the month earned and the remaining 10 percent are paid in the following month.
g. Rent for office and warehouse space is $11,500 paid monthly in cash.
h. Utilities average $5,800 per month and are paid in cash.
i. In November, Khloe expects to pay employment taxes of $6,875.
j. Since Khloe imports product from overseas, customs duty and shipping to the central location of 15 percent of current monthly
purchase cost must be paid in the month of purchase.
k. Other cash expenses for November are expected to be 540,000.
Required:
Prepare a cash budget for Khloe Company for the month of November.
Khloe Company
Cash Budget
For the Month of November
Beginning balance, cash account
Received on account from sales in:
October
November
Total cash available
Disbursements:
Payments for purchases made in:
October
November
Salaries paid for work in:
October
November
Rent
Utilities
Employment taxes
Customs duty and shipping
Other cash expenses
Total disbursements
Ending cash balance
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