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, $94,040; December 2019, $83,200; January 2020, $103,960; February 2020, $123,060; and March 2020, $131,040. 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, $18,410; January 2020, $17,530; February 2020, $19,940; and March 2020, $20,750. (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.

Respuesta :

Answer:

Jan          $  95,656

February $  115,420

March      $  127,848

Total        $  338,924

Explanation:

[tex]\left[\begin{array}{cccccc}&$January&$February&$March&$Total\\\\$Sales&103,960&123,060&131,040&934,000\\\\\\$Current Month&62,376&73,836&78,624&214,836\\$Previous&33,280&41,584&49,224&124,088\\$Total&95,656&115,420&127,848&338,924\\\end{array}\right][/tex]

We have to multiply the month sales by 60% (0.60) to obtaining the current month collection

Then, we multiply the previopus month

(December for January)

January for February)

Febraury for March)

To know the colelction form the previous period

then we add and get the total collection

January is $95,656

February is = $ 115,420

March is = $127,848

The Total Collection from the previous period is = $338,924

Calculation of  Cash Payments

                          January        February       March          Total

                                                                                                                   

Sales                   1,03,960        123,060        131,040      934,000

Current Month       62,376          73,836        78,624      214,836

Previous                 33,280         115,420         127,848      338,924

When We have to multiply the monthly sales by 60% (0.60) to obtain the current month's collection

Then, we multiply the previous month

(December for January)

January for February)

February for March)

Then, To know the Collection form the previous period

Thus, we add and get the Total collection which is $338,924

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