Question

Green Landscaping Inc. is preparing its budget for the first quarter of 2020. 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 2019 and expected service revenues for 2020 are November 2019, $94,110; December 2019, $84,830; January 2020, $102,390; February 2020, $123,530; and March 2020, $131,560. Purchases of landscaping supplies (direct materials) are paid 60% in the month of purchase and 40% the following month. Actual purchases for 2019 and expected purchases for 2020 are December 2019, $17,540; January 2020, $16,370; February 2020, $18,950; and March 2020, $19,050. (a) Prepare the following schedules for each month in the first quarter of 2020 and for the quarter in total: 1) Expected collections from clients. (2) Expected payments for landscaping supplies. (b) Determine the following balances at March 31, 2020: (1) Accounts receivable (2) Accounts payable

Answer 1

cash collection

same month = 60%

next month = 30%

second following month = 10%

November's 10% wil be collected in Jan

decembers 30% will be collected in Jan and 10% in Feb

Cash collection schedule
	Jan	Feb	March	Total Q1	Accounts receivable
Collection from November sales	$9,411[$94,110*10%]			$9,411
Collection from December sales	$25,449[$84,830*30%]	$8,483[$84,830*10%]		$33,932
Collection from January sales	$61,434[$102,390*60%]	$30,717[$102,390*30%]	$10,239[$102,390*10%]	$102,390
Collection from February sales		$74,118[$123,530*60%]	$37,059[$123,530*30%]	$111,177	$12,353[$123,530*10%]
Collection from March sales			$78,936[$131,560*60%]	$78,936	$52,624[$131,560*40%]
Total	$96,294 [$9,411+$25,449+$61,434]	$113,318 [$8,483+$30,717+$74,118]	$126,234[$10,239+$37,059+78,936]	$335,846	$64,977

Accounts receivables are $64,977

2] Accounts payable

samemonth =60% same month

40% next month

	Jan	Feb	Mar	Total	Accounts payable
payment for December purchases	$7,016[$17,540*40%]			$7,016
payment for January purchases	$9,822[$16,370*60%]	$6,548[$16,370*40%]		$16,370
payment for February purchases		$11,370[$18,950*60%]	$7,580[$18,950*40%]	$18,950
payment for March purchases			$11,430[$19,050*60%]	$11,430	$7,620[$19,050*40%]
Total	$16,838	$17,918	$19,010	$53,766	$7,620

Thus account payable are $7,620