B. Mahmoud Repair Company is preparing its budget for the first quarter of 2021. 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 2016 and expected service revenues for 2021 are: November 2020, $120,00%3; December 2020, $110,000; January 2021, $140,000; February 2021, $160,000; March 2021, $170,000. Purchases on landscaping supplies (direct materials) are paid 40% in the month of purchase and 60% the following month. Actual purchases for 2020 and expected purchases for 2021 are: December 2020, $21,000; January 2021, $20,000; February 2021, $22,000; March 2021, $27,000. Instructions (a) Prepare the following schedules for each month in the first quarter of 2021 and for the quarter in total: (1) Expected collections from clients. (2) Expected payments for landscaping supplies. (b) Determine the following balances on March 31, 2021: (1) Accounts receivable. (2) Accounts payable

B. Mahmoud Repair Company is preparing its budget for the first quarter of 2021. 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 2016 and expected service revenues for 2021 are: November 2020, $120,00%3; December 2020, $110,000; January 2021, $140,000; February 2021, $160,000; March 2021, $170,000. Purchases on landscaping supplies (direct materials) are paid 40% in the month of purchase and 60% the following month. Actual purchases for 2020 and expected purchases for 2021 are: December 2020, $21,000; January 2021, $20,000; February 2021, $22,000; March 2021, $27,000. Instructions (a) Prepare the following schedules for each month in the first quarter of 2021 and for the quarter in total: (1) Expected collections from clients. (2) Expected payments for landscaping supplies. (b) Determine the following balances on March 31, 2021: (1) Accounts receivable. (2) Accounts payable

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Master Budget

A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.

Sales Budget and Selling

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.

Question

B. Mahmoud Repair Company is preparing its budget for the first quarter of 2021. 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 2016 and expected service revenues for 2021 are: November 2020, $120,000;
December 2020, $110,000; January 2021, $140,000; February 2021, $160,000; March 2021, $170,000.
Purchases on landscaping supplies (direct materials) are paid 40% in the month of purchase and 60% the
following month. Actual purchases for 2020 and expected purchases for 2021 are: December 2020,
$21,000; January 2021, $20,000; February 2021, $22,000; March 2021, $27,000.
Instructions
(a) Prepare the following schedules for each month in the first quarter of 2021 and for the quarter in total:
(1) Expected collections from clients.
(2) Expected payments for landscaping supplies.
(b) Determine the following balances on March 31, 2021:
(1) Accounts receivable.
(2) Accounts payable.

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