Purchases on landscaping supplies direct materials are paid

Reference no: EM13483255

Environmental Landscaping Inc. is preparing its budget for the first quarter of 2012. 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 2011 and expected service revenues for 2012 are: November 2011, $90,000; December 2011, $80,000; January 2012, $100,000; February 2012, $120,000; March 2012, $130,000.

Purchases on landscaping supplies (direct materials) are paid 40% in the month of purchase and 60% the following month. Actual purchases for 2011 and expected purchases for 2012 are: December 2011, $14,000; January 2012, $12,000; February 2012, $15,000; March 2012, $18,000.

Prepare the following schedules for each month in the first quarter of 2012 and for the quarter in total: (If answer is zero, please enter 0, do not leave any fields blank.)
(1) Expected collections from clients.
(2) Expected payments for landscaping supplies.

Determine the following balances at March 31, 2012:
(1) Accounts receivable.
(2) Accounts payable.

How do you determine the accounts recievable and accounts payable?

Reference no: EM13483255

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