Minor Landscaping Company is preparing its budget for the first quarter of 2022. 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 2021 and expected service revenues for 2022 are: November 2021, $120,000; December 2021, $110,000; January 2022, $140,000; February 2022, $160,000; March 2022, $170,000. Purchases on landscaping supplies (direct materials) are paid 40% in the month of purchase and 60% the following month. Actual purchases for 2021 and expected purchases for 2022 are: December 2021, $21,000; January 2022, $20,000; February 2022, $22,000; March 2022, $27,000.

Minor Landscaping Company is preparing its budget for the first quarter of 2022. 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 2021 and expected service revenues for 2022 are: November 2021, $120,000; December 2021, $110,000; January 2022, $140,000; February 2022, $160,000; March 2022, $170,000. Purchases on landscaping supplies (direct materials) are paid 40% in the month of purchase and 60% the following month. Actual purchases for 2021 and expected purchases for 2022 are: December 2021, $21,000; January 2022, $20,000; February 2022, $22,000; March 2022, $27,000.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter4: Financial Planning And Forecasting

Section: Chapter Questions

Problem 4P

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