Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted the following sales: Quarter 1 $4,780,000 Quarter 2 5,580,000 Quarter 3 3,150,000 Quarter 4 8,400,000 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 $5,450,000 and for the fourth quarter of the current year are $7,060,000. Required: 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  $fill in the blank  4, current year fill in the blank  fill in the blank  1, next year fill in the blank  fill in the blank  2, next year fill in the blank  fill in the blank  3, next year fill in the blank  fill in the blank  4, next year fill in the blank  fill in the blank  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  $fill in the blank  $fill in the blank  $fill in the blank  Received on account from:         Quarter 3, current year fill in the blank        Quarter 4, current year fill in the blank  fill in the blank      Quarter 1, next year fill in the blank  fill in the blank  fill in the blank    Quarter 2, next year   fill in the blank  fill in the blank  fill in the blank  Quarter 3, next year     fill in the blank  fill in the blank  Quarter 4, next year fill in the blank  fill in the blank  fill in the blank  fill in the blank  Total cash receipts     $fill in the blank  $fill in the blank  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  $fill in the blank  $fill in the blank  $fill in the blank  Received on account from:         Quarter 4, current year fill in the blank        Quarter 1, next year fill in the blank  fill in the blank      Quarter 2, next year   fill in the blank  fill in the blank    Quarter 3, next year     fill in the blank  fill in the blank  Quarter 4, next year       fill in the blank  Total cash receipts $fill in the blank  $fill in the blank  $fill in the blank  $fill in the blank

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Master Budget

A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making. 

Sales Budget and Selling

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.