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Green Landscaping Budget

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Green Landscaping Inc. is preparing its budget for the first quarter of 2014. 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 2013 and expected service revenues for 2014 are November
2013, $80,000; December 2013, $90,000; January 2014, $100,000; February 2014,
$120,000; March 2014, $140,000.

Purchases of landscaping supplies (direct materials) are paid 60% in the month of
purchase and 40% the following month. Actual purchases for 2013 and expected purchases
for 2014 are December 2013, $14,000; January 2014, $12,000; February 2014,
$15,000; March 2014, $18,000.

Instructions
(a) Prepare the following schedules for each month in the first quarter of 2014 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, 2014:
(1) Accounts receivable.
(2) Accounts payable

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