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 $4,620,000 Quarter 2 5,610,000 Quarter 3 1,190,000 Quarter 4 7,840,000 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 $5,640,000 and for the fourth quarter of the current year are $7,320,000. 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 0b62a1fb700f07d_1 $fill in the blank 0b62a1fb700f07d_2 4, current year fill in the blank 0b62a1fb700f07d_3 fill in the blank 0b62a1fb700f07d_4 1, next year fill in the blank 0b62a1fb700f07d_5 fill in the blank 0b62a1fb700f07d_6 2, next year fill in the blank 0b62a1fb700f07d_7 fill in the blank 0b62a1fb700f07d_8
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
2. Cash Receipts Budget and
Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted the following sales:
| Quarter 1 | $4,620,000 |
| Quarter 2 | 5,610,000 |
| Quarter 3 | 1,190,000 |
| Quarter 4 | 7,840,000 |
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 $5,640,000 and for the fourth quarter of the current year are $7,320,000.
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 0b62a1fb700f07d_1 | $fill in the blank 0b62a1fb700f07d_2 |
| 4, current year | fill in the blank 0b62a1fb700f07d_3 | fill in the blank 0b62a1fb700f07d_4 |
| 1, next year | fill in the blank 0b62a1fb700f07d_5 | fill in the blank 0b62a1fb700f07d_6 |
| 2, next year | fill in the blank 0b62a1fb700f07d_7 | fill in the blank 0b62a1fb700f07d_8 |
| 3, next year | fill in the blank 0b62a1fb700f07d_9 | fill in the blank 0b62a1fb700f07d_10 |
| 4, next year | fill in the blank 0b62a1fb700f07d_11 | fill in the blank 0b62a1fb700f07d_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".
| Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 | |
|---|---|---|---|---|
| Cash sales | $fill in the blank 94722f019033fe3_1 | $fill in the blank 94722f019033fe3_2 | $fill in the blank 94722f019033fe3_3 | $fill in the blank 94722f019033fe3_4 |
| Received on account from: | ||||
| Quarter 3, current year | fill in the blank 94722f019033fe3_5 | |||
| Quarter 4, current year | fill in the blank 94722f019033fe3_6 | fill in the blank 94722f019033fe3_7 | ||
| Quarter 1, next year | fill in the blank 94722f019033fe3_8 | fill in the blank 94722f019033fe3_9 | fill in the blank 94722f019033fe3_10 | |
| Quarter 2, next year | fill in the blank 94722f019033fe3_11 | fill in the blank 94722f019033fe3_12 | fill in the blank 94722f019033fe3_13 | |
| Quarter 3, next year | fill in the blank 94722f019033fe3_14 | fill in the blank 94722f019033fe3_15 | ||
| Quarter 4, next year | fill in the blank 94722f019033fe3_16 | fill in the blank 94722f019033fe3_17 | fill in the blank 94722f019033fe3_18 | fill in the blank 94722f019033fe3_19 |
| Total cash receipts | $fill in the blank 94722f019033fe3_20 | $fill in the blank 94722f019033fe3_21 | $fill in the blank 94722f019033fe3_22 | $fill in the blank 94722f019033fe3_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
| Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 | |
|---|---|---|---|---|
| Cash sales | $fill in the blank 6d78fcfedfacf86_1 | $fill in the blank 6d78fcfedfacf86_2 | $fill in the blank 6d78fcfedfacf86_3 | $fill in the blank 6d78fcfedfacf86_4 |
| Received on account from: | ||||
| Quarter 4, current year | fill in the blank 6d78fcfedfacf86_5 | |||
| Quarter 1, next year | fill in the blank 6d78fcfedfacf86_6 | fill in the blank 6d78fcfedfacf86_7 | ||
| Quarter 2, next year | fill in the blank 6d78fcfedfacf86_8 | fill in the blank 6d78fcfedfacf86_9 | ||
| Quarter 3, next year | fill in the blank 6d78fcfedfacf86_10 | fill in the blank 6d78fcfedfacf86_11 | ||
| Quarter 4, next year | fill in the blank 6d78fcfedfacf86_12 | |||
| Total cash receipts | $fill in the blank 6d78fcfedfacf86_13 | $fill in the blank 6d78fcfedfacf86_14 | $fill in the blank 6d78fcfedfacf86_15 | $fill in the blank 6d78fcfedfacf86_16 |
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