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 5,590,000 Quarter 3 6,540,000 Quarter 4 8,550,000 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 $5,380,000 and for the fourth quarter of the current year are $7,200,000. 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 e16841f2202605b_1 $fill in the blank e16841f2202605b_2 4, current year fill in the blank e16841f2202605b_3 fill in the blank e16841f2202605b_4 1, next year fill in the blank e16841f2202605b_5 fill in the blank e16841f2202605b_6 2, next year fill in the blank e16841f2202605b_7 fill in the blank e16841f2202605b_8 3, next year fill in the blank e16841f2202605b_9 fill in the blank e16841f2202605b_10 4, next year fill in the blank e16841f2202605b_11 fill in the blank e16841f2202605b_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 78940f014fb100b_1 $fill in the blank 78940f014fb100b_2 $fill in the blank 78940f014fb100b_3 $fill in the blank 78940f014fb100b_4 Received on account from:         Quarter 3, current year fill in the blank 78940f014fb100b_5       Quarter 4, current year fill in the blank 78940f014fb100b_6 fill in the blank 78940f014fb100b_7     Quarter 1, next year fill in the blank 78940f014fb100b_8 fill in the blank 78940f014fb100b_9 fill in the blank 78940f014fb100b_10   Quarter 2, next year   fill in the blank 78940f014fb100b_11 fill in the blank 78940f014fb100b_12 fill in the blank 78940f014fb100b_13 Quarter 3, next year     fill in the blank 78940f014fb100b_14 fill in the blank 78940f014fb100b_15 Quarter 4, next year fill in the blank 78940f014fb100b_16 fill in the blank 78940f014fb100b_17 fill in the blank 78940f014fb100b_18 fill in the blank 78940f014fb100b_19 Total cash receipts $fill in the blank 78940f014fb100b_20 $fill in the blank 78940f014fb100b_21 $fill in the blank 78940f014fb100b_22 $fill in the blank 78940f014fb100b_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 e0dd3a00f026fc3_1 $fill in the blank e0dd3a00f026fc3_2 $fill in the blank e0dd3a00f026fc3_3 $fill in the blank e0dd3a00f026fc3_4 Received on account from:         Quarter 4, current year fill in the blank e0dd3a00f026fc3_5       Quarter 1, next year fill in the blank e0dd3a00f026fc3_6 fill in the blank e0dd3a00f026fc3_7     Quarter 2, next year   fill in the blank e0dd3a00f026fc3_8 fill in the blank e0dd3a00f026fc3_9   Quarter 3, next year     fill in the blank e0dd3a00f026fc3_10 fill in the blank e0dd3a00f026fc3_11 Quarter 4, next year       fill in the blank e0dd3a00f026fc3_12 Total cash receipts $fill in the blank e0dd3a00f026fc3_13 $fill in the blank e0dd3a00f026fc3_14 $fill in the blank e0dd3a00f026fc3_15 $fill in the blank e0dd3a00f026fc3_16

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A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.