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Chloc's Closet Chloc Mendez owns a clothing company, Chloc's Closct. She has a team of tailors who work for 8 hours every day from Monday to Saturday. Demand for her business is strong but there seems to be something preventing her from meeting the demands of her customers. Chloc sells to both big department stores and small boutique stores under the brand Chloe's Closet. Some brands also ask her to manufacture their own designs. Business for Chloe has been good since it started last 2014. In fact, despite the tough competition from cheaper manufacturers abroad, she still manages to grow her customer base. On December 4, 2015 Chloe received a billing statement from a raw material supplier for an amount of PHP400,000 which will be due in 5 days. She is also scheduled to pay her employces monthly salary of PHP70,000 the following day. Upon checking her bank account, she only has a PHP67,000 balance. She knew she had exceeded her sales target last October and November so she is wondering why she only has this amount of cash in her bank account. Was her money stolen? Being a CPA, she checked the bank statement and her financial records and found no mistakes.

Chloc's Closet Chloc Mendez owns a clothing company, Chloc's Closct. She has a team of tailors who work for 8 hours every day from Monday to Saturday. Demand for her business is strong but there seems to be something preventing her from meeting the demands of her customers. Chloc sells to both big department stores and small boutique stores under the brand Chloe's Closet. Some brands also ask her to manufacture their own designs. Business for Chloe has been good since it started last 2014. In fact, despite the tough competition from cheaper manufacturers abroad, she still manages to grow her customer base. On December 4, 2015 Chloe received a billing statement from a raw material supplier for an amount of PHP400,000 which will be due in 5 days. She is also scheduled to pay her employces monthly salary of PHP70,000 the following day. Upon checking her bank account, she only has a PHP67,000 balance. She knew she had exceeded her sales target last October and November so she is wondering why she only has this amount of cash in her bank account. Was her money stolen? Being a CPA, she checked the bank statement and her financial records and found no mistakes.

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter17: Activity Resource Usage Model And Tactical Decision Making
Section: Chapter Questions
Problem 7E
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4. Check the efficiency of Inventory management? What was Inventory turnover between 2014 and 2015? 5. What was the payable turnover for Chloe's Closet? How did it affect the problem? 6. What factors lead to the low cash balance for Chloe's Closet?
Chloc's Closet Chloc Mendez owns a clothing company, Chloc's Closet. She has a team of tailors who work for 8 hours every day from Monday to Saturday. Demand for her business is strong but there seems to be something preventing her from meeting the demands of her customers. Chloe sells to both big department stores and small boutique stores under the brand Chloe's Closet. Some brands also ask her to manufacture their own designs. Business for Chloe has been good since it started last 2014. In fact, despite the tough competition from cheaper manufacturers abroad, she still manages to grow her customer base. On December 4, 2015 Chloe received a billing statement from a raw material supplier for an amount of PHP400,000 which will be due in 5 days. She is also schedulcd to pay her cmployces monthly salary of PHP70,000 the following day. Upon checking her bank account, she only has a PHP67,000 balance. She knew she had exceeded her sales target last October and November so she is wondering why she only has this amount of cash in her bank account. Was her money stolen? Being a CPA, she checked the bank statement and her financial records and found no mistakes.
Transcribed Image Text:Chloc's Closet Chloc Mendez owns a clothing company, Chloc's Closet. She has a team of tailors who work for 8 hours every day from Monday to Saturday. Demand for her business is strong but there seems to be something preventing her from meeting the demands of her customers. Chloe sells to both big department stores and small boutique stores under the brand Chloe's Closet. Some brands also ask her to manufacture their own designs. Business for Chloe has been good since it started last 2014. In fact, despite the tough competition from cheaper manufacturers abroad, she still manages to grow her customer base. On December 4, 2015 Chloe received a billing statement from a raw material supplier for an amount of PHP400,000 which will be due in 5 days. She is also schedulcd to pay her cmployces monthly salary of PHP70,000 the following day. Upon checking her bank account, she only has a PHP67,000 balance. She knew she had exceeded her sales target last October and November so she is wondering why she only has this amount of cash in her bank account. Was her money stolen? Being a CPA, she checked the bank statement and her financial records and found no mistakes.
Here is the latest financial statement of Chloe's Closet as of November 30, 2015: Statement of Financial Position Nov 30, 2015 Dec 31, 2014 Cash 60,000.00 270,000.00 Accounts Receivable 740,000.00 500,000.00 Inventory 600,000.00 400,000.00 Machinery 800,000.00 850,000.00 TOTAL ASSETS 2,200,000.00 2,020,000.00 Accounts Payable 400,000.00 500,000.00 Salaries Payable 150,000.00 150,000.00 Total Liabilities 400,000.00 500,000.00 Capital Stock 200,000.00 200,000.00 Accumulated Profit 1,600,000.00 1,320,000.00 Total Equity 1,800,000.00 1,520,000.00 TOTAL EQUITY AND LIABILITIES 2,200,000.00 2,020,000.00 Statement of Financial Position Nov 30, 2015 Dec 31, 2014 Sales 800,000.00 600,000.00 Cost of Goods Sold 300,000.00 225,000.00 Operating Expenses 100,000.00 105,000.00 Operating Income 400,000.00 270,000.00 Machinery 120,000.00 81,000.00 NET INCOME 280,000.00 189,000.00
Transcribed Image Text:Here is the latest financial statement of Chloe's Closet as of November 30, 2015: Statement of Financial Position Nov 30, 2015 Dec 31, 2014 Cash 60,000.00 270,000.00 Accounts Receivable 740,000.00 500,000.00 Inventory 600,000.00 400,000.00 Machinery 800,000.00 850,000.00 TOTAL ASSETS 2,200,000.00 2,020,000.00 Accounts Payable 400,000.00 500,000.00 Salaries Payable 150,000.00 150,000.00 Total Liabilities 400,000.00 500,000.00 Capital Stock 200,000.00 200,000.00 Accumulated Profit 1,600,000.00 1,320,000.00 Total Equity 1,800,000.00 1,520,000.00 TOTAL EQUITY AND LIABILITIES 2,200,000.00 2,020,000.00 Statement of Financial Position Nov 30, 2015 Dec 31, 2014 Sales 800,000.00 600,000.00 Cost of Goods Sold 300,000.00 225,000.00 Operating Expenses 100,000.00 105,000.00 Operating Income 400,000.00 270,000.00 Machinery 120,000.00 81,000.00 NET INCOME 280,000.00 189,000.00
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