Green Landscaping Inc. is preparing its budget for the first quarter of 2017. Th
ID: 2530863 • 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, $93,620; December 2016, $83,630; January 2017, $102,120; February 2017, $123,950; 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, $16,410; January 2017, $13,540; February 2017, $18,970; March 2017, $23,150.
(a)
Prepare the following schedules for each month in the first quarter of 2017 and for the quarter in total:
Explanation / Answer
Green Landscaping inc Schedule of Expected Collections from Clients first Quarter January February March Quarter Novem (93,620*10%) 9362 9362 Dec (83,630*30%;10%) 25089 8363 33452 Jan (102,120*60%;30%;10%) 61272 30636 10212 102120 Feb (123,950*60%;30%) 74370 37185 111555 March (133,630*60%) 80178 80178 total Collections 95723 113369 127575 336667 Schedule of Expected Payments for Landscaping supplies January February March Quarter Dec (16,410*40%) 6564 6564 jan (13,540*60%;40%) 8124 5416 13540 feb (18,970*60%;40%) 11382 7588 18970 march (23,150*60%) 13890 13890 total payments 14688 16798 21478 52964 b) 1) Account receivable (133,630*40%) 53452 2) Accounts payable (23,150*40%) 9260
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