Question 1

John Matthew is president of Woodhull Nurseries, Inc. This corporation has four locations and has been in business for six years. Each retail outlet offers over 300 varieties of plants and trees. Sam, the controller, has been asked for a cash budget for the Southern Division for the first quarter of 2016.

Projected data supporting the budget are summarized below. Collection history for the accounts receivable has shown that 30 percent of all credit sales are collected in the month of sale, 60 percent in the month following the sale, and 8 percent in the second month following the sale. Two percent of the credit sales are uncollectable. Purchases are all paid for in the month following the purchase. As of December 31, 2015, the Southern Division had a cash balance of $9,600.

Sales (60 percent on credit) Purchases

November 2015 $160,000 December 2015 $86,800

December 2015 200,00 January 2016 124,700

January 2016 120,000 February 99,440

February 160,00 March 104,800

March 140,000

Salaries and wages are projected to be $25,200; $33,200 in February; and $21,200 in March. Monthly costs are estimated to be: utilities, $4,220; collection fees, $1,700; rent, $5,300; equipment depreciation, $5,440; supplies $2,480; small tools, $3,140; and miscellaneous expenses, $1,900.

Required to prepare:

(A) Collection Schedule

(B) Payment Schedule

Cash budget for John Matthew by month for the Southern Division for the first quarter of March 2016.