Green Landscaping Inc. is preparing its budget for the first quarter of 2017. Th
ID: 2460526 • 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, $91,260; December 2016, $81,190; January 2017, $101,850; February 2017, $121,880; March 2017, $132,290.
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, $15,330; January 2017, $16,880; February 2017, $16,250; March 2017, $20,310.
(a)
Prepare the following schedules for each month in the first quarter of 2017 and for the quarter in total:
(1) Expected collections from clients.
January
February
March
Quarter
2) Expected payments for landscaping supplies.
January
February
March
Quarter
(b)
Determine the following balances at March 31, 2017:
GREEN LANDSCAPING INC.
Schedule of Expected Collections From Clients
For the Quarter Ending March 31, 2017March 31, 2017For the Year Ending March 31, 2017
January
February
March
Quarter
November$
$
$
$
December January February March Total collections$
$
$
$
Explanation / Answer
a) 1) Schedule of Expected collections from clients November December January February March Service revenue 91260 81190 101850 121880 132290 January February March Quarter November 9126 9126 December 24357 8119 32476 January 61110 30555 10185 101850 February 73128 36564 109692 March 79374 79374 94593 111802 126123 332518 2) Schedule of Expected payments for Landscaping supplies November December January February March Service revenue 15330 16880 16250 20310 January February March Quarter December 6132 6132 January 10128 6752 16880 February 9750 6500 16250 March 12186 12186 16260 16502 18686 51448 b) Accounts receivable February sales *10% 12188 March sales * 40% 52916 Total 65104 Aaccounts payable March purchases 8124 Balances at March 31, 2017 Accounts receivable 65104 Accounts payable 8124
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