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, $91,440; December 2016, $84,110; January 2017, $104,600; February 2017, $124,970; March 2017, $132,960.

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, $18,200; January 2017, $14,500; February 2017, $17,470; March 2017, $22,240.

(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.

GREEN LANDSCAPING INC. Schedule of Expected Collections From Clients For the Year Ending March 31, 2017For the Quarter Ending March 31, 2017March 31, 2017
		January		February		March		Quarter
November		$		$		$		$
December
January
February
March
Total collections		$		$		$		$

(2) Expected payments for landscaping supplies.

GREEN LANDSCAPING INC. Schedule of Expected Payments for Landscaping Supplies For the Quarter Ending March 31, 2017March 31, 2017For the Year Ending March 31, 2017
		January		February		March		Quarter
December		$		$		$		$
January
February
March
Total payments		$		$		$		$

(b)

Determine the following balances at March 31, 2017:

(1)		Accounts receivable		$
(2)		Accounts payable		$

Answer 1

Answer-a)-

GREEN LANDESCAPING INC.
SCHEDULE OF EXPECTED COLLECTIONS FROM CIENTS
FOR THE FIRST QUARTER OF 2017
PARTICULARS	JANUARY	FEBRUARY	MARCH	QUARTER
	$	$	$	$
November	$91440*10%= $9144			9144
December	$84110*30%= $25233	$84110*10%= $8411		33644
January	$104600*60%= $62760	$104600*30%= $31380	$104600*10%= $10460	104600
Febuary		$124970*60%= $74982	$124970*30%= $37491	112473
March			$132960*60%= $79776	79776
Total collections $	97137	114773	127727	339637
GREEN LANDESCAPING INC.
SCHEDULE OF EXPECTED PAYMENTS FOR LANDSCAPING SUPPLIES
FOR THE FIRST QUARTER OF 2017
PARTICULARS	JANUARY	FEBRUARY	MARCH	QUARTER
	$	$	$	$
December	$18200*40%= $7280			7280
January	$14500*60%= $8700	$14500*40%= $5800		14500
Febuary		$17470*60%= $10482	$17470*40%= $6988	17470
March			$22240*60%= $13344	13344
Total payments $	15980	16282	20332	52594

b)- Accounts receivable on March 31, 2017 =($124970*10%)+($132960*40%)

= $12497+$53184

= $65681

Accounts payable/ on March 31, 2017 = $22240*40%

= $8896