Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted the following sales: Quarter 1 $4,780,000 Quarter 2 5,280,000 Quarter 3 5,700,000 Quarter 4 8,420,000 In Shalimar’s experience, 10 percent of sales are paid in cash. Of the sales on account, 65 percent are collected in the quarter of sale, 25 percent are collected in the quarter following the sale, and 7 percent are collected in the second quarter after the sale. The remaining 3 percent are never collected. Total sales for the third quarter of the current year are $5,280,000 and for the fourth quarter of the current year are $7,620,000. Required: Question Content Area 1. Calculate cash sales and credit sales expected in the last two quarters of the current year, and in each quarter of next year. Quarter Cash Sales Credit Sales 3, current year $fill in the blank 43aa7d03501507c_1 $fill in the blank 43aa7d03501507c_2 4, current year fill in the blank 43aa7d03501507c_3 fill in the blank 43aa7d03501507c_4 1, next year fill in the blank 43aa7d03501507c_5 fill in the blank 43aa7d03501507c_6 2, next year fill in the blank 43aa7d03501507c_7 fill in the blank 43aa7d03501507c_8 3, next year fill in the blank 43aa7d03501507c_9 fill in the blank 43aa7d03501507c_10 4, next year fill in the blank 43aa7d03501507c_11 fill in the blank 43aa7d03501507c_12   Question Content Area 2. Construct a cash receipts budget for Shalimar Company for each quarter of the next year, showing the cash sales and the cash collections from credit sales. If an amount is zero, enter "0". Shalimar CompanyCash Receipts BudgetFor the Coming Year   Quarter 1 Quarter 2 Quarter 3 Quarter 4           Cash sales $fill in the blank b8459e013fab02d_1 $fill in the blank b8459e013fab02d_2 $fill in the blank b8459e013fab02d_3 $fill in the blank b8459e013fab02d_4 Received on account from:         Quarter 3, current year fill in the blank b8459e013fab02d_5       Quarter 4, current year fill in the blank b8459e013fab02d_6 fill in the blank b8459e013fab02d_7     Quarter 1, next year fill in the blank b8459e013fab02d_8 fill in the blank b8459e013fab02d_9 fill in the blank b8459e013fab02d_10   Quarter 2, next year   fill in the blank b8459e013fab02d_11 fill in the blank b8459e013fab02d_12 fill in the blank b8459e013fab02d_13 Quarter 3, next year     fill in the blank b8459e013fab02d_14 fill in the blank b8459e013fab02d_15 Quarter 4, next year fill in the blank b8459e013fab02d_16 fill in the blank b8459e013fab02d_17 fill in the blank b8459e013fab02d_18 fill in the blank b8459e013fab02d_19 Total cash receipts $fill in the blank b8459e013fab02d_20 $fill in the blank b8459e013fab02d_21 $fill in the blank b8459e013fab02d_22 $fill in the blank b8459e013fab02d_23   Question Content Area 3. What if the recession led Shalimar’s top management to assume that in the next year 10 percent of credit sales would never be collected? The expected payment percentages in the quarter of sale and the quarter after sale are assumed to be the same. How would that affect cash received in each quarter? Construct a revised cash budget using the new assumption. Shalimar CompanyCash Receipts BudgetFor the Coming Year   Quarter 1 Quarter 2 Quarter 3 Quarter 4           Cash sales $fill in the blank 1731b6fd300efa0_1 $fill in the blank 1731b6fd300efa0_2 $fill in the blank 1731b6fd300efa0_3 $fill in the blank 1731b6fd300efa0_4 Received on account from:         Quarter 4, current year fill in the blank 1731b6fd300efa0_5       Quarter 1, next year fill in the blank 1731b6fd300efa0_6 fill in the blank 1731b6fd300efa0_7     Quarter 2, next year   fill in the blank 1731b6fd300efa0_8 fill in the blank 1731b6fd300efa0_9   Quarter 3, next year     fill in the blank 1731b6fd300efa0_10 fill in the blank 1731b6fd300efa0_11 Quarter 4, next year       fill in the blank 1731b6fd300efa0_12 Total cash receipts $fill in the blank 1731b6fd300efa0_13 $fill in the blank 1731b6fd300efa0_14 $fill in the blank 1731b6fd300efa0_15 $fill in the blank 1731b6fd300efa0_16

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Cash Receipts Budget and Accounts Receivable Aging Schedule

Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted the following sales:

Quarter 1 $4,780,000
Quarter 2 5,280,000
Quarter 3 5,700,000
Quarter 4 8,420,000

In Shalimar’s experience, 10 percent of sales are paid in cash. Of the sales on account, 65 percent are collected in the quarter of sale, 25 percent are collected in the quarter following the sale, and 7 percent are collected in the second quarter after the sale. The remaining 3 percent are never collected. Total sales for the third quarter of the current year are $5,280,000 and for the fourth quarter of the current year are $7,620,000.

Required:

Question Content Area

1. Calculate cash sales and credit sales expected in the last two quarters of the current year, and in each quarter of next year.

Quarter Cash Sales Credit Sales
3, current year $fill in the blank 43aa7d03501507c_1 $fill in the blank 43aa7d03501507c_2
4, current year fill in the blank 43aa7d03501507c_3 fill in the blank 43aa7d03501507c_4
1, next year fill in the blank 43aa7d03501507c_5 fill in the blank 43aa7d03501507c_6
2, next year fill in the blank 43aa7d03501507c_7 fill in the blank 43aa7d03501507c_8
3, next year fill in the blank 43aa7d03501507c_9 fill in the blank 43aa7d03501507c_10
4, next year fill in the blank 43aa7d03501507c_11 fill in the blank 43aa7d03501507c_12
 

Question Content Area

2. Construct a cash receipts budget for Shalimar Company for each quarter of the next year, showing the cash sales and the cash collections from credit sales. If an amount is zero, enter "0".

Shalimar CompanyCash Receipts BudgetFor the Coming Year
  Quarter 1 Quarter 2 Quarter 3 Quarter 4
         
Cash sales $fill in the blank b8459e013fab02d_1 $fill in the blank b8459e013fab02d_2 $fill in the blank b8459e013fab02d_3 $fill in the blank b8459e013fab02d_4
Received on account from:        
Quarter 3, current year fill in the blank b8459e013fab02d_5      
Quarter 4, current year fill in the blank b8459e013fab02d_6 fill in the blank b8459e013fab02d_7    
Quarter 1, next year fill in the blank b8459e013fab02d_8 fill in the blank b8459e013fab02d_9 fill in the blank b8459e013fab02d_10  
Quarter 2, next year   fill in the blank b8459e013fab02d_11 fill in the blank b8459e013fab02d_12 fill in the blank b8459e013fab02d_13
Quarter 3, next year     fill in the blank b8459e013fab02d_14 fill in the blank b8459e013fab02d_15
Quarter 4, next year fill in the blank b8459e013fab02d_16 fill in the blank b8459e013fab02d_17 fill in the blank b8459e013fab02d_18 fill in the blank b8459e013fab02d_19
Total cash receipts $fill in the blank b8459e013fab02d_20 $fill in the blank b8459e013fab02d_21 $fill in the blank b8459e013fab02d_22 $fill in the blank b8459e013fab02d_23
 

Question Content Area

3. What if the recession led Shalimar’s top management to assume that in the next year 10 percent of credit sales would never be collected? The expected payment percentages in the quarter of sale and the quarter after sale are assumed to be the same. How would that affect cash received in each quarter? Construct a revised cash budget using the new assumption.

Shalimar CompanyCash Receipts BudgetFor the Coming Year
  Quarter 1 Quarter 2 Quarter 3 Quarter 4
         
Cash sales $fill in the blank 1731b6fd300efa0_1 $fill in the blank 1731b6fd300efa0_2 $fill in the blank 1731b6fd300efa0_3 $fill in the blank 1731b6fd300efa0_4
Received on account from:        
Quarter 4, current year fill in the blank 1731b6fd300efa0_5      
Quarter 1, next year fill in the blank 1731b6fd300efa0_6 fill in the blank 1731b6fd300efa0_7    
Quarter 2, next year   fill in the blank 1731b6fd300efa0_8 fill in the blank 1731b6fd300efa0_9  
Quarter 3, next year     fill in the blank 1731b6fd300efa0_10 fill in the blank 1731b6fd300efa0_11
Quarter 4, next year       fill in the blank 1731b6fd300efa0_12
Total cash receipts $fill in the blank 1731b6fd300efa0_13 $fill in the blank 1731b6fd300efa0_14 $fill in the blank 1731b6fd300efa0_15 $fill in the blank 1731b6fd300efa0_16
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