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

Quarter 1	$4,610,000
Quarter 2	5,360,000
Quarter 3	4,760,000
Quarter 4	8,090,000

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 $5,140,000 and for the fourth quarter of the current year are $6,920,000.

Required:

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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 1cf8effbb07d06e_1	$fill in the blank 1cf8effbb07d06e_2
4, current year	fill in the blank 1cf8effbb07d06e_3	fill in the blank 1cf8effbb07d06e_4
1, next year	fill in the blank 1cf8effbb07d06e_5	fill in the blank 1cf8effbb07d06e_6
2, next year	fill in the blank 1cf8effbb07d06e_7	fill in the blank 1cf8effbb07d06e_8
3, next year	fill in the blank 1cf8effbb07d06e_9	fill in the blank 1cf8effbb07d06e_10
4, next year	fill in the blank 1cf8effbb07d06e_11	fill in the blank 1cf8effbb07d06e_12

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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 842ddcfc9075f93_1	$fill in the blank 842ddcfc9075f93_2	$fill in the blank 842ddcfc9075f93_3	$fill in the blank 842ddcfc9075f93_4
Received on account from:
Quarter 3, current year	fill in the blank 842ddcfc9075f93_5
Quarter 4, current year	fill in the blank 842ddcfc9075f93_6	fill in the blank 842ddcfc9075f93_7
Quarter 1, next year	fill in the blank 842ddcfc9075f93_8	fill in the blank 842ddcfc9075f93_9	fill in the blank 842ddcfc9075f93_10
Quarter 2, next year		fill in the blank 842ddcfc9075f93_11	fill in the blank 842ddcfc9075f93_12	fill in the blank 842ddcfc9075f93_13
Quarter 3, next year			fill in the blank 842ddcfc9075f93_14	fill in the blank 842ddcfc9075f93_15
Quarter 4, next year	fill in the blank 842ddcfc9075f93_16	fill in the blank 842ddcfc9075f93_17	fill in the blank 842ddcfc9075f93_18	fill in the blank 842ddcfc9075f93_19
Total cash receipts	$fill in the blank 842ddcfc9075f93_20	$fill in the blank 842ddcfc9075f93_21	$fill in the blank 842ddcfc9075f93_22	$fill in the blank 842ddcfc9075f93_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 28cf58061077024_1	$fill in the blank 28cf58061077024_2	$fill in the blank 28cf58061077024_3	$fill in the blank 28cf58061077024_4
Received on account from:
Quarter 4, current year	fill in the blank 28cf58061077024_5
Quarter 1, next year	fill in the blank 28cf58061077024_6	fill in the blank 28cf58061077024_7
Quarter 2, next year		fill in the blank 28cf58061077024_8	fill in the blank 28cf58061077024_9
Quarter 3, next year			fill in the blank 28cf58061077024_10	fill in the blank 28cf58061077024_11
Quarter 4, next year				fill in the blank 28cf58061077024_12
Total cash receipts	$fill in the blank 28cf58061077024_13	$fill in the blank 28cf58061077024_14	$fill in the blank 28cf58061077024_15	$fill in the blank 28cf58061077024_16

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