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Exercise 9-18 Green Landscaping Inc. is preparing its budget for the first quarter of 2020. The...

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, $92,440; December 2019, $83,270; January 2020, $103,690; February 2020, $121,440; and March 2020, $134,410.

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, $16,270; January 2020, $15,270; February 2020, $18,730; and March 2020, $21,600.

(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.

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Answer:-

Green Landscaping Inc.
Schedule of expected cash collections from clients
Particulars January Febuary March Total
November collections $92440*10%=$9244 0 0 9244
December collections $83270*30%=$24981 $83270*10%=$8327 0 33308
January collections $103690*60%=$62214 $103690*30%=$31107 $103690*10%=$10369 103690
Febuary collections 0 $121440*60%=$72864 $121440*30%=$36432 109296
March collections 0 0 $134410*60%=$80646 80646
Total cash collections 96439 112298 127447 336184
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