Green Landscaping Inc. is preparing its budget for the first quarter of 2017. Th
ID: 2510751 • Letter: G
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, $91,690; December 2016, $82,770; January 2017, $101,930; February 2017, $121,930; March 2017, $134,390. 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, $18,090; January 2017, $17,410; February 2017, $20,720; March 2017, $21,570. (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. GREEN LANDSCAPING INC. Schedule of Expected Collections From Clients January February March Quarter November $ $ $ $ December January February March Total collections $ $ $ $ (2) Expected payments for landscaping supplies. GREEN LANDSCAPING INC. Schedule of Expected Payments for Landscaping Supplies January February March Quarter December $ $ $ $ January February March Total payments $ $ $ $ (b) Determine the following balances at March 31, 2017: (1) Accounts receivable $ (2) Accounts payable $
Explanation / Answer
Answer:-
(A)
Schedule of Expected Collections from Clients
For the Quarter Ending March 31, 2017
Particular
January
February
March
Quarter
November($91,690)
$9,169
$9,169
December($82,770)
$24,831
$8,277
$33,108
January($101,930)
$61,158
$30,579
$10,193
$101,930
February($121,930)
$73,158
$36,579
$109,737
March($134,390)
$80,634
$80,634
Total Collection
$95,158
$112,014
$127,406
$334,578
Schedule of Expected Payment for Landscaping Supplies
For the Quarter Ending March 31, 2017
Particular
January
February
March
Quarter
December($18,090)
$7,236
$7,236
January($17,410)
$10,446
$6,964
$17,410
February($20,720)
$12,432
$8,288
$20,720
March($21,570)
$12,942
$12,942
Total Payment
$17,682
$19,396
$21,230
$58,308
(B)
1. Account Receivable at March 31=($121,930*10%) + ($134,390*60%)
= $12,193 + $80,634
=$92,827
2.Accounts Payable at March 31 = ($21,570*40%)=$8628
Particular
January
February
March
Quarter
November($91,690)
$9,169
$9,169
December($82,770)
$24,831
$8,277
$33,108
January($101,930)
$61,158
$30,579
$10,193
$101,930
February($121,930)
$73,158
$36,579
$109,737
March($134,390)
$80,634
$80,634
Total Collection
$95,158
$112,014
$127,406
$334,578
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