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, $91,260; December 2016, $81,190; January 2017, $101,850; February 2017, $121,880; March 2017, $132,290.
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, $15,330; January 2017, $16,880; February 2017, $16,250; March 2017, $20,310.
(a) Prepare the following schedules for each month in the first quarter of 2017 and for the quarter in total:
(1) Expected collections from clients.
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GREEN LANDSCAPING INC.
Schedule of Expected Collections From Clients
For the Quarter Ending March 31, 2017March 31, 2017For the Year Ending March 31, 2017
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January
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February
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March
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Quarter
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November
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$
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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 Year Ending March 31, 2017For the Quarter Ending March 31, 2017March 31, 2017
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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, 2017:
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(1)
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Accounts receivable
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$
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(2)
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Accounts payable
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$
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