Minor landscaping company is preparing its budget for the

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Reference no: EM13586743

_{Minor Landscaping Company is preparing its budget for the first quarter of 2013. 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 provided, 30% the month after, and 10% the second month after receiving service.}

_{Actual service revenue for 2012 and expected service revenues for 2013 are: November 2012, $120,000; December 2012, $110,000; January 2013, $140,000; February 2013, $160,000; March 2013, $170,000.}

_{Purchases on landscaping supplies (direct materials) are paid 40% in the month of purchase and 60% the following month. Actual purchases for 2012 and expected purchases for 2013 are: December 2012, $21,000; January 2013, $20,000; February 2013, $22,000; March 2013, $27,000.}

_Instructions

_{(a) Prepare the following schedules for each month in the first quarter of 2013 and for the quarter in total:}

_{(1) Expected collections from clients.}

_{(2) Expected payments for landscaping supplies.}

_{(b) Determine the following balances at March 31, 2013:}

_{(1) Accounts receivable.}

_{(2) Accounts payable.}

Reference no: EM13586743

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