Khloe Company imports gift items from overseas and sells them 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 $53,817. b. All sales are on account. Sales in September were $950,000 and in October were $1,240,000. c. November sales are expected to be $2,145,000. 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 $750,000 and in October were $980,000. 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 $48,000 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 $12,300 paid monthly in cash. h. Utilities average $6,100 per month and are paid in cash. i. In November, Khloe expects to pay employment taxes of $6,625. j. Since Khloe imports product from overseas, customs duty and shipping to the central locationof30percentofcurrentmonthlypurchasecostmustbepaidinthemonthofpurchase. k. Other cash expenses for November are expected to be $41,500. Required: 1. Prepare a cash budget for Khloe Company for the month of November. 2. What if Khloe faced a customs duty and shipping percentage of 35 percent? How would that affect the November cash budget? Khloe Company imports gift items from overseas and sells them

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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Khloe Company imports gift items from overseas and sells them

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 $53,817.

b. All sales are on account. Sales in September were $950,000 and in October were $1,240,000.

c. November sales are expected to be $2,145,000.

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 $750,000 and in October were $980,000. 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 $48,000 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 $12,300 paid monthly in cash.

h. Utilities average $6,100 per month and are paid in cash.

i. In November, Khloe expects to pay employment taxes of $6,625.

j. Since Khloe imports product from overseas, customs duty and shipping to the central locationof30percentofcurrentmonthlypurchasecostmustbepaidinthemonthofpurchase.

k. Other cash expenses for November are expected to be $41,500.

Required:

1. Prepare a cash budget for Khloe Company for the month of November.

2. What if Khloe faced a customs duty and shipping percentage of 35 percent? How would that affect the November cash budget?

Khloe Company imports gift items from overseas and sells them

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