Cash BudgetKhloe 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:The October 31 balance in the cash account is $53,965.All sales are on account. Sales in September were $990,000 and in October were $1,330,000.November sales are expected to be $2,160,000.In Khloe’s experience, 70 percent of sales are collected in the month of sale and 27 percent are collected in the month following sale. The remaining credit sales are uncollectible.Khloe purchases all merchandise on account. Purchases in September were $715,000 and in October were $950,000. November purchases are expected to be $2,020,000 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.Khloe Company has nine employees who are paid a total of $41,000 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.Rent for office and warehouse space is $11,700 paid monthly in cash.Utilities average $6,200 per month and are paid in cash.In November, Khloe expects to pay employment taxes of $6,625.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.Other cash expenses for November are expected to be $38,000.Required:Prepare a cash budget for Khloe Company for the month of November.Khloe CompanyCash BudgetFor the Month of NovemberBeginning balance, cash account$fill in the blank 1Received on account from sales in: Octoberfill in the blank 2Novemberfill in the blank 3Total cash available$fill in the blank 4Disbursements: Payments for purchases made in: Octoberfill in the blank 5Novemberfill in the blank 6Salaries paid for work in: Octoberfill in the blank 7Novemberfill in the blank 8Rentfill in the blank 9Utilitiesfill in the blank 10Employment taxesfill in the blank 11Customs duty and shippingfill in the blank 12Other cash expensesfill in the blank 13Total disbursements$fill in the blank 14Ending cash balance$fill in the blank 15

A budget is a statement containing an estimate of future expenses and income. A budget helps us to…

Answered: Cash Budget

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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Question

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:

The October 31 balance in the cash account is $53,965.
All sales are on account. Sales in September were $990,000 and in October were $1,330,000.
November sales are expected to be $2,160,000.
In Khloe’s experience, 70 percent of sales are collected in the month of sale and 27 percent are collected in the month following sale. The remaining credit sales are uncollectible.
Khloe purchases all merchandise on account. Purchases in September were $715,000 and in October were $950,000. November purchases are expected to be $2,020,000 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.
Khloe Company has nine employees who are paid a total of $41,000 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.
Rent for office and warehouse space is $11,700 paid monthly in cash.
Utilities average $6,200 per month and are paid in cash.
In November, Khloe expects to pay employment taxes of $6,625.
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.
Other cash expenses for November are expected to be $38,000.

Required:

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

Khloe CompanyCash BudgetFor the Month of November

Beginning balance, cash account	$fill in the blank 1
Received on account from sales in:
October	fill in the blank 2
November	fill in the blank 3
Total cash available	$fill in the blank 4
Disbursements:
Payments for purchases made in:
October	fill in the blank 5
November	fill in the blank 6
Salaries paid for work in:
October	fill in the blank 7
November	fill in the blank 8
Rent	fill in the blank 9
Utilities	fill in the blank 10
Employment taxes	fill in the blank 11
Customs duty and shipping	fill in the blank 12
Other cash expenses	fill in the blank 13
Total disbursements	$fill in the blank 14
Ending cash balance	$fill in the blank 15

Definition Definition Estimate of an organization's cash flow for a future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future.

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