Exercise 9-18 Green Landscaping Inc. is preparing its budget for the first quart

Question

Exercise 9-18 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, $93,200; December 2016, $84,640; January 2017, $104,020; February 2017, $122,030; March 2017, $132,570.

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, $15,800; January 2017, $13,490; February 2017, $17,080; March 2017, $23,050.

(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.

(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 s (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

Explanation / Answer

1. Calculation of expected collection from client is as follows -

2. Calculation of expected payments for landscaping supplies -

(b) Determination the following balances at March 31 2017 -

Calcualtion of accounts receivable -

receivables of sales in the month for feb'2017 + receivables of sales in the month for march'2017

= 12203 + 53028

= 65231

Calcualtion of accounts payables -

payables for purchase in the month march'2017 = (23050 - 13830) = 9220

Please comment in case of further clarification required/wrong answer.

GREEN LANDSCAPING INC. Schedule of Expected collections from clients Months Sales Jan. Feb. march Quarter November 93200 9320 9320 December 84640 25392 8464 33856 January 104020 62412 31206 10402 104020 February 122030 73218 36609 109827 March 132570 79542 79542 Total Collections 97124 112888 126553 336565

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