Cash Receipts Budget and Accounts Receivable Aging Schedule Cash Receipts Budget and Accounts Receivable Aging ScheduleShalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted the following sales:Quarter 1$4,730,000Quarter 25,430,000Quarter 34,070,000Quarter 47,720,000In 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 quarterafter the sale. The remaining 3 percent are never collected. Total sales for the third quarter of the current year are $5,330,000 and for the fourth quarter of the current year are $7,070,000.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.QuarterCash SalesCredit Sales3, current year4, current year1, next year2, next year3, next year4, next year 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 YearQuarter 1 Quarter 2 Quarter 3 Quarter 4Cash salesReceived on account from:Quarter 3, current yearQuarter 4, current yearQuarter 1, next yearQuarter 2, next yearQuarter 3, next yearQuarter 4, next yearTotal cash receipts3. 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 bethe 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 YearQuarter 1 Quarter 2 Quarter 3 Quarter 4Cash salesReceived on account from:Quarter 4, current yearQuarter 1, next yearQuarter 2, next yearQuarter 3, next yearQuarter 4, next yearTotal cash receipts

The question is based on the concept of Budgeting. Cash receipts budget is prepared to calculate the…

Answered: Cash Receipts Budget and Accounts…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

Problem 11CE: Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted...

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Cash Receipts Budget and Accounts Receivable Aging Schedule

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
Received on account from:
Quarter 3, current year
Quarter 4, current year
Quarter 1, next year
Quarter 2, next year
Quarter 3, next year
Quarter 4, next year
Total cash receipts
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
Received on account from:
Quarter 4, current year
Quarter 1, next year
Quarter 2, next year
Quarter 3, next year
Quarter 4, next year
Total cash receipts

Definition Definition Estimate of an organization's cash flow for a future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future.

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