Cash Receipts Budget and Accounts Receivable Aging Schedule

Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted the following sales:

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 $5,740,000 and for the fourth quarter of the current year are $7,680,000.

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.

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".

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.

Cornerstone Exercise 8.11 (Algorithmic) 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 $4,700,000 Quarter 2 5,230,000 Quarter 3 6,680,000 Quarter 4 8,590,000 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 $5,710,000 and for the fourth quarter of the current year are $7,170,000. 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 $ $ 4, current year 1, next year 2, next year 3, next year 4, 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 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 $ $ $ $

Cash Receipts Budget and Accounts Receivable Aging Schedule

Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted the following sales:

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 $5,240,000 and for the fourth quarter of the current year are $7,670,000.

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.

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".

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.

Cash Receipts Budget and Accounts Receivable Aging Schedule

Shalimar Company manufactures and sells industrial products. For next year, Shalimar has budgeted the following sales:

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 $5,220,000 and for the fourth quarter of the current year are $7,530,000.

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.

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".

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.

1. A loan is to be repaid by twenty end of quarter payments of $1,000. The interest rate for the first two years is 6% convertible quarterly, and last three years is 8% convertible quarterly. Find the outstanding loan balance just after the 5^th payment.

Please don't use Excel! I'm looking to learn how to do it with the formulas.

The first and most important rule of tax incidence is that tax laws do not accurately identify who actually bears the burden of the tax. The statutory incidence of a tax is determined by who pays the tax to the government. For example, the statutory incidence of a tax paid by producers of gasoline is on those very producers. Statutory incidence, however, ignores the fact that markets react to taxation. This market reaction determines the economic incidence of a tax, the change in the resources available to any economic agent as a result of taxation. The economic incidence of any tax is the difference between the individual’s available resources before and after the tax has been imposed. Thus the side of the market on which the tax is imposed is irrelevant to the distribution of tax burdens.

So please give a brief description of who bears the burden of the tax (consumer or producers) based on the elasticities of the supply and demand curve (consider perfectly inelastic, elastic, and perfectly elastic cases).

Case I: Supply is perfectly inelastic.  Does the elasticity of the demand curve affect your answer?

Case II: Supply is elastic.  Does the elasticity of the demand curve affect your answer?

Case III: Supply is perfectly elastic.  Does the elasticity of the demand curve affect your answer?

Question 253.125 pts

What was the first (and arguably most important) act of antitrust litigation in the United States?

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Question 263.125 pts

You are evaluating the possible merger of Honda and Philip Morris. What kind of merger is this?

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Question 273.125 pts

  When deregulation was initially being discussed, what was one of the most serious concerns raised for electric companies?

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Question 283.125 pts

Suppose there are 6 firms in an entire industry. Their market shares are as follows:

Firm 1: 20%

Firm 2: 10%

Firm 3: 30%

Firm 4: 5%

Firm 5: 17%

Firm 6: 18%

What is the 4-firm ratio and the HHI for this industry?

It is well known that most IPOs have extraordinary return on the first day of trading but under perform the general market in the next 5 years. Why do issuers intentionally under price their shares at beginning? And why do you think IPOs under perform in the long term?

Please only answer the first question!

The OECD is a club of the most advanced economic nations in the world – based on living standards and per capita income more than absolute size. Newer members include Turkey, Mexico and Hungary. China and India are not yet members despite their vast populations. Currently the OECD has 32 members.

The 2009 OECD Employment Outlook discusses prospects for unemployment and possible policy responses. The evolution of unemployment depends on (a) the size of the shock, (b) the flexibility of the economy to respond and (c) the extent of support by government. In the worst previous postwar recession of 1973-76, OECD unemployment increased by half. By 2009, the OECD reckoned that unemployment would rise by 80 per cent - from 5.5 per cent to 10 per cent of the labour force - during 2007-10.

This analysis reflected the magnitude of the initial shock. Clearly, this would affect different countries differently. One way in which to assess which economies were most vulnerable is to estimate their capacity to absorb shocks through flexible labour markets that match potential workers and job opportunities more quickly. This is likely to depend on wage flexibility, labour market mobility, attitudes of trade unions and the extent of labour market regulation.

The figure below shows a measure of labour market flexibility based on labour market history during 2000-05. It plots the annual fraction of workers hired to new jobs or leaving existing jobs (by choice or dismissal) during the year. It shows that in Turkey, Denmark and the United States, half of all workers are changing jobs annually. In contrast, the countries with the lowest labour market mobility are Greece, Italy and Austria.

Annual fraction of workers hired or fired, 2000-05 (%)


Source : OECD Employment Outlook, 2009  
Econ 1110 Section D Case # 1 Winter 2018 3

Countries with greater job stability are probably slower to experience initial unemployment but, when unemployment does increase, they are also less successful at helping people out of unemployment back into work. Since there is considerable cross-country evidence that those in longer-term unemployment find it ever more difficult to reconnect with the labour market, in the medium run this fiscal burden of unemployment benefits is likely to be greater in countries with less flexible labour markets.

Governments provide two kinds of support. The first is measurable by the generosity of unemployment benefit, which has two dimensions – the replacement rate (the ratio of benefit to previous wages in work) and the number of years for which benefit is available. The table below documents considerable differences across countries.

In Norway and Belgium, with strong traditions of social democracy, unemployment benefit is generous both because it is high relative to wages in work and because it continues for at least 5 years after a spell of unemployment begins. French unemployment benefit is initially as generous but less so after year 2. The UK is considerably less generous in replacement rate, but entitlement continues undiminished over the 5 year period. In countries such as Japan, Greece and the USA, unemployment benefit is almost worthless after the first year in unemployment.

Duration of unemployment Year 1 Year 2 Year 5   Replacement rate (%) Norway 72 72 72 Belgium 65 63 63 France 67 64 31 UK 28 28 28 Japan 45 3 3 Greece 33 5 1 USA 28 0 0 Source: OECD Employment Outlook, 2009

The second aspect of state support for the unemployed are active labour market policies that enhance incentives, confidence and the ability of the unemployed to look for jobs. Even if the post-crash recession reflected a sharp fall in demand – for output and then for labour – it is important not to neglect supply-side policies that maintain the maximum labour market flexibility.

With the benefit of hindsight, the most puzzling features of the labour market since the financial crash have been (a) the relatively small increase in unemployment and (b) the disappointing performance of labour productivity. For example, UK unemployment was still only 8 per cent in late 2012. The US has also avoided double-digit unemployment and appeared to have resumed steady if modest output growth. Two explanations consistent with facts (a) and (b) are that (i) firms engaged in more labour hoarding in recession than in previous cyclical recessions, and (ii) that many workers who would otherwise have become unemployed took up part-time working or self-employment. The rise of the Internet allowed many people to embark on small businesses in the service sector.

Econ 1110 Section D Case # 1 Winter 2018 4

With long-term demographic trends also implying that pension schemes would face greater and greater financial strains, and with governments removing subsidies to pension contributions in an effort to retain fiscal solvency, it is also possible that some older workers simply retired while the going was good, rather than face a period of unemployment when rehiring of older workers was likely to be a tough prospect.


Questions on case study 23.2

1. The case study highlights the difference between two types of unemployment, namely frictional and structural unemployment. Explain these two types with examples from the case study.

2. With reference to the case study, explain how higher labour market flexibility can be less costly to both the unemployed and the economy.

3. Unemployment tends to fall during economic booms and rise in periods of economic recession. This type of unemployment is known as cyclical or demand-deficient unemployment. Explain what supply–side policies are and how they can be implemented to reduce unemployment.