Green Landscaping Inc. is preparing its budget for the first quarter of 2014. Th
ID: 2464512 • Letter: G
Question
Green Landscaping Inc. is preparing its budget for the first quarter of 2014. The next step in the budgeting process is to prepare a cash receipts schedule and a cash payments schedule. To that end the following information has been collected.
Clients usually pay 60% of their fee in the month that service is provided, 30% the month after, and 10% the second month after receiving service.
Actual service revenue for 2013 and expected service revenues for 2014 are November 2013, $80,000; December 2013, $90,000; January 2014, $100,000; February 2014, $120,000; March 2014, $140,000.
Purchases of landscaping supplies (direct materials) are paid 60% in the month of purchase and 40% the following month. Actual purchases for 2013 and expected purchases for 2014 are December 2013, $14,000; January 2014, $12,000; February 2014, $15,000; March 2014, $18,000.
(a) Prepare the following schedules for each month in the first quarter of 2014 and for the quarter in total:
(1) Expected collections from clients.
(2) Expected payments for landscaping supplies
(a) (1) GREEN LANDSCAPING INC.
Schedule of Expected Collections From Clients
For the Quarter Ending March 31, 2014
Jan
Feb
Mar
Total
NOV ($80,000)
DEC ($90,000)
JAN ($100,000)
FEB ($120,000)
MAR ($140,000)
Total collections
(2) GREEN LANDSCAPING INC.
Schedule of Expected Payments for Landscaping Supplies
For the Quarter Ending March 31, 2014
Jan
Feb
Mar
Total
DEC ($14,000)
JAN ($12,000)
FEB ($15,000)
MAR ($18,000)
Total collections
(b) Accounts receivable at MAR 31, 2014:
Accounts payable at MAR 31, 2014:
(a) (1) GREEN LANDSCAPING INC.
Schedule of Expected Collections From Clients
For the Quarter Ending March 31, 2014
Jan
Feb
Mar
Total
NOV ($80,000)
DEC ($90,000)
JAN ($100,000)
FEB ($120,000)
MAR ($140,000)
Total collections
Explanation / Answer
Jan Feb Mar Total NOV ($80,000) 8000 DEC ($90,000) 27000 9000 JAN ($100,000) 60000 30000 10000 100000 FEB ($120,000) 36000 72000 108000 MAR ($140,000) 84000 84000 Total collections 95000 39000 10000 100000 (2) GREEN LANDSCAPING INC. Schedule of Expected Payments for Landscaping Supplies Jan Feb Mar Total DEC ($14,000) 5600 5600 JAN ($12,000) 7200 4800 12000 FEB ($15,000) 9000 6000 15000 MAR ($18,000) 10800 10800 Total collections 12800 13800 16800 43400 (b) Accounts receivable at MAR 31, 2014: (120000+140000)-(108000+84000) 68000 Accounts payable at MAR 31, 2014:18000*.40 7200
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