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	$4,730,000
Quarter 2	5,230,000
Quarter 3	1,020,000
Quarter 4	7,730,000

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 $5,490,000 and for the fourth quarter of the current year are $7,280,000.

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 907fe3fa1018045_1	$fill in the blank 907fe3fa1018045_2
4, current year	fill in the blank 907fe3fa1018045_3	fill in the blank 907fe3fa1018045_4
1, next year	fill in the blank 907fe3fa1018045_5	fill in the blank 907fe3fa1018045_6
2, next year	fill in the blank 907fe3fa1018045_7	fill in the blank 907fe3fa1018045_8
3, next year	fill in the blank 907fe3fa1018045_9	fill in the blank 907fe3fa1018045_10
4, next year	fill in the blank 907fe3fa1018045_11	fill in the blank 907fe3fa1018045_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 Company Cash Receipts Budget For the Coming Year

	Quarter 1	Quarter 2	Quarter 3	Quarter 4
Cash sales	$fill in the blank 5e58f6fe9029015_1	$fill in the blank 5e58f6fe9029015_2	$fill in the blank 5e58f6fe9029015_3	$fill in the blank 5e58f6fe9029015_4
Received on account from:
Quarter 3, current year	fill in the blank 5e58f6fe9029015_5
Quarter 4, current year	fill in the blank 5e58f6fe9029015_6	fill in the blank 5e58f6fe9029015_7
Quarter 1, next year	fill in the blank 5e58f6fe9029015_8	fill in the blank 5e58f6fe9029015_9	fill in the blank 5e58f6fe9029015_10
Quarter 2, next year		fill in the blank 5e58f6fe9029015_11	fill in the blank 5e58f6fe9029015_12	fill in the blank 5e58f6fe9029015_13
Quarter 3, next year			fill in the blank 5e58f6fe9029015_14	fill in the blank 5e58f6fe9029015_15
Quarter 4, next year	fill in the blank 5e58f6fe9029015_16	fill in the blank 5e58f6fe9029015_17	fill in the blank 5e58f6fe9029015_18	fill in the blank 5e58f6fe9029015_19
Total cash receipts	$fill in the blank 5e58f6fe9029015_20	$fill in the blank 5e58f6fe9029015_21	$fill in the blank 5e58f6fe9029015_22	$fill in the blank 5e58f6fe9029015_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 Company Cash Receipts Budget For the Coming Year

	Quarter 1	Quarter 2	Quarter 3	Quarter 4
Cash sales	$fill in the blank 7246e5f92fad01e_1	$fill in the blank 7246e5f92fad01e_2	$fill in the blank 7246e5f92fad01e_3	$fill in the blank 7246e5f92fad01e_4
Received on account from:
Quarter 4, current year	fill in the blank 7246e5f92fad01e_5
Quarter 1, next year	fill in the blank 7246e5f92fad01e_6	fill in the blank 7246e5f92fad01e_7
Quarter 2, next year		fill in the blank 7246e5f92fad01e_8	fill in the blank 7246e5f92fad01e_9
Quarter 3, next year			fill in the blank 7246e5f92fad01e_10	fill in the blank 7246e5f92fad01e_11
Quarter 4, next year				fill in the blank 7246e5f92fad01e_12
Total cash receipts	$fill in the blank 7246e5f92fad01e_13	$fill in the blank 7246e5f92fad01e_14	$fill in the blank 7246e5f92fad01e_15	$fill in the blank 7246e5f92fad01e_16