Environmental Landscaping Inc. is preparing its budget for the first quarter of 2016. The next step is to prepare a cash receipts schedule and a cash payments schedule. The following information has been collected:

1. Clients usually pay 50% of their fee in the month when the service is provided, 40% the next month, and 10% in the second month after receiving the service.

2. Actual service revenues for 2015 and expected service revenues for 2016 are as follows: November 2015, $90,000; December 2015, $70,000; January 2016, $110,000; February 2016, $120,000; and March 2016, $130,000.

3. The company pays for purchases of landscaping supplies (direct materials) 60 % in the month of purchase and 40% the following month. Actual purchases for 2015 and expected purchases for 2016 are: December 2015, $14,000; January 2016, $13,000; February 2016, $15,000; and March 2016, $20,000.

Instructions

(a) Prepare the following schedules for each month in the first quarter of 2016 and for the quarter in total: (1) expected collections from clients, and (2) expected payments for landscaping supplies.

(b) Determine the following balances at March 31, 2016: (1) accounts receivable, and (2) accounts payable.