Question

Exercise 9-18 Green Landscaping Inc. 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, $93,450; December 2019, $84,870; January 2020, $103,910; February 2020, $123,360; and March 2020, $133,910. 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, $19,810; January 2020, $16,440; February 2020, $18,390; and March 2020, $21,630. (a) Prepare the following schedules for each month in the first quarter of 2020 and for the quarter in total: (1) Expected collections from clients. GREEN LANDSCAPING INC. Schedule of Expected Collections From Clients January February March Quarter November December January February March Total collections

Answer 1

a) Schedule of expected cash collection

For the quarter ended December 2020

	January	February	march	Quarter
November	9345			9345
December	25461	8487		33948
January	62346	31173	10391	103910
February		74016	37008	111024
March			80346	80346
Total cash collection	97152	113676	127745	338573

b) Schedule of expected cash payment

For the quarter ended December 2020

	January	February	march	Quarter
December	7924			7924
January	9864	6576		16440
February		11034	7356	18390
March			12978	12978
Total cash payment	17788	17610	20334	55732

Account receivable balance = ( 123360*10%+133910*40%) = 65900

Account payable balance = 12978*4/6 = 8652