Green Landscaping Inc. is preparing its budget for the first quarter of 2014. 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 provided, 30% the month after, and 10% the second month after receiving service.
Actual service revenue for 2013 and expected service revenues for 2014 are November 2013, $93,480; December 2013, $82,590; January 2014, $102,310; February 2014, $124,990; March 2014, $133,520.
Purchases of landscaping supplies (direct materials) are paid 60% in the month of purchase and 40% the following month. Actual purchases for 2013 and expected purchases for 2014 are December 2013, $18,080; January 2014, $13,070; February 2014, $19,060; March 2014, $23,510.
(a) Prepare the following schedules for each month in the first quarter of 2014 and for the quarter in total:
(1) Expected collections from clients.
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GREEN LANDSCAPING INC.
Schedule of Expected Collections From Clients
For the Quarter Ending March 31, 2014
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January
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February
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March
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Quarter
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November
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$
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$
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$
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$
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December
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January
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February
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March
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Total collections
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$
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$
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$
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$
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(2) Expected payments for landscaping supplies.
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GREEN LANDSCAPING INC.
Schedule of Expected Payments for Landscaping Supplies
For the Quarter Ending March 31, 2014
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January
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February
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March
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Quarter
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December
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$
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$
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$
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$
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January
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February
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March
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Total payments
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$
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$
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$
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$
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(b) Determine the following balances at March 31, 2014:
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Accounts receivable |
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$
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Accounts payable |
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$
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