Question
Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted the following sales: Quarter 1 $4,730,000 Quarter 2 5,850,000 Quarter 3 2,020,000
Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted the following sales:
| Quarter 1 | $4,730,000 |
| Quarter 2 | 5,850,000 |
| Quarter 3 | 2,020,000 |
| Quarter 4 | 8,190,000 |
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 $5,800,000 and for the fourth quarter of the current year are $7,730,000.
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 40e7a4f6affc033_1 | $fill in the blank 40e7a4f6affc033_2 |
| 4, current year | fill in the blank 40e7a4f6affc033_3 | fill in the blank 40e7a4f6affc033_4 |
| 1, next year | fill in the blank 40e7a4f6affc033_5 | fill in the blank 40e7a4f6affc033_6 |
| 2, next year | fill in the blank 40e7a4f6affc033_7 | fill in the blank 40e7a4f6affc033_8 |
| 3, next year | fill in the blank 40e7a4f6affc033_9 | fill in the blank 40e7a4f6affc033_10 |
| 4, next year | fill in the blank 40e7a4f6affc033_11 | fill in the blank 40e7a4f6affc033_12 |
Feedback Area
Feedback
Apply the percentages given to the applicable quarter.
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".
| Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 | |
|---|---|---|---|---|
| Cash sales | $fill in the blank ffd907f5efa1fe4_1 | $fill in the blank ffd907f5efa1fe4_2 | $fill in the blank ffd907f5efa1fe4_3 | $fill in the blank ffd907f5efa1fe4_4 |
| Received on account from: | ||||
| Quarter 3, current year | fill in the blank ffd907f5efa1fe4_5 | |||
| Quarter 4, current year | fill in the blank ffd907f5efa1fe4_6 | fill in the blank ffd907f5efa1fe4_7 | ||
| Quarter 1, next year | fill in the blank ffd907f5efa1fe4_8 | fill in the blank ffd907f5efa1fe4_9 | fill in the blank ffd907f5efa1fe4_10 | |
| Quarter 2, next year | fill in the blank ffd907f5efa1fe4_11 | fill in the blank ffd907f5efa1fe4_12 | fill in the blank ffd907f5efa1fe4_13 | |
| Quarter 3, next year | fill in the blank ffd907f5efa1fe4_14 | fill in the blank ffd907f5efa1fe4_15 | ||
| Quarter 4, next year | fill in the blank ffd907f5efa1fe4_16 | fill in the blank ffd907f5efa1fe4_17 | fill in the blank ffd907f5efa1fe4_18 | fill in the blank ffd907f5efa1fe4_19 |
| Total cash receipts | $fill in the blank ffd907f5efa1fe4_20 | $fill in the blank ffd907f5efa1fe4_21 | $fill in the blank ffd907f5efa1fe4_22 | $fill in the blank ffd907f5efa1fe4_23 |
Feedback Area
Feedback
Use the credit sales calculated in Requirement 1. to determine cash receipts for the coming year. Apply the percentages given to the applicable quarter.
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.
| Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 | |
|---|---|---|---|---|
| Cash sales | $fill in the blank aaae4a0e4f9b00c_1 | $fill in the blank aaae4a0e4f9b00c_2 | $fill in the blank aaae4a0e4f9b00c_3 | $fill in the blank aaae4a0e4f9b00c_4 |
| Received on account from: | ||||
| Quarter 4, current year | fill in the blank aaae4a0e4f9b00c_5 | |||
| Quarter 1, next year | fill in the blank aaae4a0e4f9b00c_6 | fill in the blank aaae4a0e4f9b00c_7 | ||
| Quarter 2, next year | fill in the blank aaae4a0e4f9b00c_8 | fill in the blank aaae4a0e4f9b00c_9 | ||
| Quarter 3, next year | fill in the blank aaae4a0e4f9b00c_10 | fill in the blank aaae4a0e4f9b00c_11 | ||
| Quarter 4, next year | fill in the blank aaae4a0e4f9b00c_12 | |||
| Total cash receipts | $fill in the blank aaae4a0e4f9b00c_13 | $fill in the blank aaae4a0e4f9b00c_14 | $fill in the blank aaae4a0e4f9b00c_15 | $fill in the blank aaae4a0e4f9b00c_16 |
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Intermediate Accounting
Authors: Earl K. Stice, James D. Stice
18th edition
538479736, 978-1111534783, 1111534780, 978-0538479738
