Green Landscaping Inc. is preparing its budget for the first quarter of 2017. Th

Question

Green Landscaping Inc. is preparing its budget for the first quarter of 2017. 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 performed, 30% the month after, and 10% the second month after receiving service.

Actual service revenue for 2016 and expected service revenues for 2017 are November 2016, $94,060; December 2016, $82,800; January 2017, $102,130; February 2017, $122,810; March 2017, $133,630.

Purchases of landscaping supplies (direct materials) are paid 60% in the month of purchase and 40% the following month. Actual purchases for 2016 and expected purchases for 2017 are December 2016, $16,500; January 2017, $15,550; February 2017, $16,970; March 2017, $19,770.
a) prepare expected collections from clients, b) expected payments for landscaping supplies

Explanation / Answer

a. Expected collections from clients :

b. Expected payments for landscaping supplies:

January 2017 February 2017 March 2017 Expected service revenues 102,130 122,810 133,630 Collection of service revenues of November 2016 9,406 December 2016 24,840 8,280 January 2017 61,278 30,639 10,213 February 2017 73,686 36,843 March 2017 80,178 Total 95,524 112,605 127,234

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