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, $91,690; December 2016, $82,770; January 2017, $101,930; February 2017, $121,930; March 2017, $134,390. 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, $18,090; January 2017, $17,410; February 2017, $20,720; March 2017, $21,570. (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 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 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)

1. GREEN LANDSCAPING INC.

Schedule of Expected Collections from Clients

For the Quarter Ending March 31, 2017

Particular	January	February	March	Quarter
November($91,690)	$9,169			$9,169
December($82,770)	$24,831	$8,277		$33,108
January($101,930)	$61,158	$30,579	$10,193	$101,930
February($121,930)		$73,158	$36,579	$109,737
March($134,390)			$80,634	$80,634
Total Collection	$95,158	$112,014	$127,406	$334,578

1. GREEN LANDSCAPING INC.

Schedule of Expected Payment for Landscaping Supplies

For the Quarter Ending March 31, 2017

Particular	January	February	March	Quarter
December($18,090)	$7,236			$7,236
January($17,410)	$10,446	$6,964		$17,410
February($20,720)		$12,432	$8,288	$20,720
March($21,570)			$12,942	$12,942
Total Payment	$17,682	$19,396	$21,230	$58,308

(B)

1. Account Receivable at March 31=($121,930*10%) + ($134,390*60%)

                                                            = $12,193 + $80,634

                                                            =$92,827

2.Accounts Payable at March 31 = ($21,570*40%)=$8628