Green Landscaping is preparing its budget for the first quarter of 2020. The next step in the

Question:

Green Landscaping is preparing its budget for the first quarter of 2020. 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 2019 and expected service revenues for 2020 are November 2019, $80,000; December 2019, $90,000; January 2020, $100,000; February 2020, $120,000; and March 2020, $140,000.

Purchases of landscaping supplies (direct materials) are paid 60% in the month of purchase and 40% the following month. Actual purchases for 2019 and expected purchases for 2020 are December 2019, $14,000; January 2020, $12,000; February 2020, $15,000; and March 2020, $18,000.


Instructions

a. Prepare the following schedules for each month in the fi rst quarter of 2020 and for the quarter in total:

1. Expected collections from clients.

2. Expected payments for landscaping supplies.

b. Determine the following budgeted balances at March 31, 2020:

1. Accounts receivable.

2. Accounts payable.

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Related Book For  book-img-for-question

Accounting Principles

ISBN: 978-1119419617

IFRS global edition

Authors: Paul D Kimmel, Donald E Kieso Jerry J Weygandt

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