company X is preparing its budget for the first quarter of 2017. The next step i
ID: 2498198 • Letter: C
Question
company X 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, $92,770; December 2016, $84,270; January 2017, $102,860; February 2017, $121,440; March 2017, $133,780.
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, $15,460; January 2017, $13,420; February 2017, $16,790; March 2017, $22,730.
(a)
Prepare the following schedules for each month in the first quarter of 2017 and for the quarter in total:
(1) Expected collections from clients.
January
February
March
Quarter
(2) Expected payments for landscaping supplies.
January
February
March
Quarter
GREEN LANDSCAPING INC.
Schedule of Expected Collections From Clients
March 31, 2017For the Year Ending March 31, 2017For the Quarter Ending March 31, 2017
January
February
March
Quarter
November$
$
$
$
December January February March Total collections$
$
$
$
Explanation / Answer
Solution:
(a)
(b)
GREEN LANDSCAPING INC. Schedule of Expected Collections From Clients January Feburary March Quarter November 9,277 - - 9,277 December 25,281 8,427 - 33,708 January 61,716 30,858 10,286 102,860 Feburary - 72,864 36,432 109,296 March - - 80,268 80,268 Total Collections 96,274 112,149 126,986 335,409Related Questions
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