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, $91,000; December 2016,?81,000; January 2017, 101,000; February 2017,?121,000; March 2017, $131,000. 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, $15,000; January 2017 $13,000; February 2017 $16,000; March 2017, $19,000. 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 FebruaryMarchQuarter January February March Total collections (2) Expected payments for landscaping supplies GREEN INC. February March January February March Total payments s

Explanation / Answer

a) Expected collection from clients :

Schedule of cash payment :

b(1) Account receivable = 121000*10%+131000*40% = 64500

Account payable = 19000*40% = 7600

January February March Quarter November 9100 9100 December 24300 8100 32400 January 60600 30300 10100 101000 February 72600 36300 108900 march 78600 78600 Total 94000 111000 125000 330000

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