Minor Landscaping Company is preparing its budget for the first quarter of 2017. The next step in the

budgeting process is to prepare 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 2016 and expected service revenues for 2017 are: November 2016, $120,000;

December 2016, $110,000; January 2017, $140,000; February 2017, $160,000; March 2017, $170,000.

Purchases on landscaping supplies (direct materials) are paid 40% in the month of purchase and 60% the

following month. Actual purchases for 2016 and expected purchases for 2017 are: December 2016,

$21,000; January 2017, $20,000; February 2017, $22,000; March 2017, $27,000.

Instructions

(a) Prepare the following schedules for each month in the first quarter of 2017 and for the quarter in

total. Show your work for full marks:

(1) Expected collections from clients. (5 marks)

(2) Expected payments for landscaping supplies. (5 marks)

(b) Determine the following balances at March 31, 2017. Show your work for full marks: (3 marks)

(1) Accounts receivable.

(2) Accounts payable.