Prepare Cash collection schedule

Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter9: Long-term Liabilities
Section: Chapter Questions
Problem 103.3C
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Prepare Cash collection schedule

Sales Budget
For 2021
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Discounts
Uncollectible
Total
Estimated Unit Sales
40,000
44,000
48,400
53,240
185,640
Unit Price
64.00
66.00
62.00
62.00
63.38
Total Sales Revenue
2,560,000.00
2,904,000.00
3,000,800.00
3,300,880.00
11,765,680.00
Cash Sales (20%)
Credit Sales (80%)
512,000.00
580,800.00
600,160.00
660,176.00
2,353,136.00
2,048,000.00
2,323,200.00
2,400,640.00
2,640,704.00
9,412,544.00
Undiscounted Current Quarter
1,228,800.00
1,393,920.00
1,440,384.00
1,584,422.40
1st Quarter Collections
1,204,224.00
614,400.00
184,320.00
24,576.00
20,480.00
2,048,000.00
2nd Quarter Collections
1,366,041.60
696,960.00
209,088.00
27,878.40
23,232.00
2,323,200.00
3rd Quarter Collections
1,411,576.32
720,192.00
28,807.68
24,006.40
2,184,582.40
4th Quarter Collections
1,552,733.95
31,688.45
26,407.04
1,610,829.44
8,166,611.84
Total
1,204,224.00
1,980,441.60
2,292,856.32
2,482,013.95
112,950.53
94,125.44
Transcribed Image Text:Sales Budget For 2021 Quarter 1 Quarter 2 Quarter 3 Quarter 4 Discounts Uncollectible Total Estimated Unit Sales 40,000 44,000 48,400 53,240 185,640 Unit Price 64.00 66.00 62.00 62.00 63.38 Total Sales Revenue 2,560,000.00 2,904,000.00 3,000,800.00 3,300,880.00 11,765,680.00 Cash Sales (20%) Credit Sales (80%) 512,000.00 580,800.00 600,160.00 660,176.00 2,353,136.00 2,048,000.00 2,323,200.00 2,400,640.00 2,640,704.00 9,412,544.00 Undiscounted Current Quarter 1,228,800.00 1,393,920.00 1,440,384.00 1,584,422.40 1st Quarter Collections 1,204,224.00 614,400.00 184,320.00 24,576.00 20,480.00 2,048,000.00 2nd Quarter Collections 1,366,041.60 696,960.00 209,088.00 27,878.40 23,232.00 2,323,200.00 3rd Quarter Collections 1,411,576.32 720,192.00 28,807.68 24,006.40 2,184,582.40 4th Quarter Collections 1,552,733.95 31,688.45 26,407.04 1,610,829.44 8,166,611.84 Total 1,204,224.00 1,980,441.60 2,292,856.32 2,482,013.95 112,950.53 94,125.44
Shrek & Fiona Company
Statement of Financial Position
As of December 31, 2020
Current Assets
Current Liabilities
Cash
18,000
Accounts Payable (N2)
240,000
Accounts Receivable (N1)
1,192,000
Taxes Payable
13,200
Less: Uncollectible accounts
(22,400) 1,169,600
Dividends Payable
500,000
Inventories
Total Current Liabilities
753,200
Raw Materials (12,000 pounds)
Finished Goods (4,000 units)
30,000
140,000
170,000
Total Current Assets
1,357,600
Stockholder's Equity
Common Stock (100,000 shares)
500,000
Non-current Assets
Retained Earnings
360,400
Property, plant, and equipment
320,000
Total Stockholder's Equity
860,400
Less: Accumulated depreciation
(64,000)
256,000
Total Assets
1,613,600
Total Liabilities and SHE
1,613,600
N1 2020 3rd quarter sales P2,500,000
P
200,000
2020 4th quarter sales P3,100,000
992,000
P 1,192,000
N2 2020 3rd quarter purchases P300,000
75,000
165,000
2020 4th quarter purchases P330,000
P
240,000
1. Estimated unit sales for the first quarter of 2021 is 40,000 units and expected to increase 10% quarterly. Selling
price fluctuates as follows:
Quarter
1st
2nd
3rd
4th
Unit price
64
66
62
62
Assume that of each quarter's sales: 20% are cash sales while the remaining 80% are credit sales. Shrek & Fiona
Company estimates that 60% of credit sales are collected in the quarter of sale with 2% discount, 30% in the quarter
of following sale, 9% in the second quarter following sale and 1% are considered as uncollectible.
1. Income tax is 30%, paid on the first quarter of the following year.
2. For cash budget, assume the following:
a. The company desires to maintain P15,000 minimum cash balance
b. Dividend is declared every end of the 4th quarter of the year P15 per issued and outstanding share and paid
every 2nd quarter of the following year
c. At the end of the 2nd quarter, the company plans to purchase P100,000 worth of equipment.
d. Any excess cash at the end of the 1st quarter of the year is used to buy long term investments P10,000
increments. 3% interest rate is credited to the company's bank account at the quarter's end based on
original cost of investment
e. In case of deficit, the company borrow from the bank P10,000 increments, payable in one year, 10% interest
rate is automatically debited to the company's bank account at the end of every quarter.
Transcribed Image Text:Shrek & Fiona Company Statement of Financial Position As of December 31, 2020 Current Assets Current Liabilities Cash 18,000 Accounts Payable (N2) 240,000 Accounts Receivable (N1) 1,192,000 Taxes Payable 13,200 Less: Uncollectible accounts (22,400) 1,169,600 Dividends Payable 500,000 Inventories Total Current Liabilities 753,200 Raw Materials (12,000 pounds) Finished Goods (4,000 units) 30,000 140,000 170,000 Total Current Assets 1,357,600 Stockholder's Equity Common Stock (100,000 shares) 500,000 Non-current Assets Retained Earnings 360,400 Property, plant, and equipment 320,000 Total Stockholder's Equity 860,400 Less: Accumulated depreciation (64,000) 256,000 Total Assets 1,613,600 Total Liabilities and SHE 1,613,600 N1 2020 3rd quarter sales P2,500,000 P 200,000 2020 4th quarter sales P3,100,000 992,000 P 1,192,000 N2 2020 3rd quarter purchases P300,000 75,000 165,000 2020 4th quarter purchases P330,000 P 240,000 1. Estimated unit sales for the first quarter of 2021 is 40,000 units and expected to increase 10% quarterly. Selling price fluctuates as follows: Quarter 1st 2nd 3rd 4th Unit price 64 66 62 62 Assume that of each quarter's sales: 20% are cash sales while the remaining 80% are credit sales. Shrek & Fiona Company estimates that 60% of credit sales are collected in the quarter of sale with 2% discount, 30% in the quarter of following sale, 9% in the second quarter following sale and 1% are considered as uncollectible. 1. Income tax is 30%, paid on the first quarter of the following year. 2. For cash budget, assume the following: a. The company desires to maintain P15,000 minimum cash balance b. Dividend is declared every end of the 4th quarter of the year P15 per issued and outstanding share and paid every 2nd quarter of the following year c. At the end of the 2nd quarter, the company plans to purchase P100,000 worth of equipment. d. Any excess cash at the end of the 1st quarter of the year is used to buy long term investments P10,000 increments. 3% interest rate is credited to the company's bank account at the quarter's end based on original cost of investment e. In case of deficit, the company borrow from the bank P10,000 increments, payable in one year, 10% interest rate is automatically debited to the company's bank account at the end of every quarter.
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