Question

Novak 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, $92,440; December 2016, $83,270; January 2017, $103,690; February 2017, $121,440; March 2017, $134,410. 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, $16,270; January 2017, $15,270; February 2017, $18,730; March 2017, $21,600.

(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. NOVAK 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 $ $ $ $ (2) Expected payments for landscaping supplies. NOVAK LANDSCAPING INC. Schedule of Expected Payments for Landscaping Supplies For the Quarter Ending March 31, 2017For the Year Ending March 31, 2017March 31, 2017 January February March Quarter December $ $ $ $ January February March     Total payments $ $ $ $

Answer 1

(1)

Particulars	January	Feburary	March	Quarter
November	9,244			9,244
December	24,981	8,327		33,308
January	62,214	31,107	10,369	103,690
Feburary		72,864	36,432	109,296
March			80,646	80,646
Total cash collections	96,439	112,298	127,447	336,184

Formula version

Particulars	January	Feburary	March	Quarter
November	=92440*10%			=SUM(C5:E5)
December	=83270*30%	=83270*10%		=SUM(C6:E6)
January	=103690*60%	=103690*30%	=103690*10%	=SUM(C7:E7)
Feburary		=121440*60%	=121440*30%	=SUM(C8:E8)
March			=134410*60%	=SUM(C9:E9)
Total cash collections	=SUM(C5:C9)	=SUM(D5:D9)	=SUM(E5:E9)	=SUM(F5:F9)

(2)

Particulars	January	Feburary	March	Quarter
December	6,508			6,508
January	9,162	6,108		15,270
Feburary		11,238	7,492	18,730
March			12,960	12,960
Total payments	15,670	17,346	20,452	53,468

Formula version

Particulars	January	Feburary	March	Quarter
December	=16270*40%			=SUM(C15:E15)
January	=15270*60%	=15270*40%		=SUM(C16:E16)
Feburary		=18730*60%	=18730*40%	=SUM(C17:E17)
March			=21600*60%	=SUM(C18:E18)
Total payments	=SUM(C15:C18)	=SUM(D15:D18)	=SUM(E15:E18)	=SUM(F15:F18)