Paul’s Pool Service provides pool cleaning, chemical application, and pool repai
ID: 2563157 • Letter: P
Question
Paul’s Pool Service provides pool cleaning, chemical application, and pool repairs for residential customers. Clients are billed weekly for services provided and usually pay 60 percent of their fees in the month the service is provided. In the month following service, Paul collects 35 percent of service fees. The final 5 percent is collected in the second month following service. Paul purchases his supplies on credit, and pays 50 percent in the month of purchase and the remaining 50 percent in the month following purchase. Of the supplies Paul purchases, 85 percent is used in the month of purchase, and the remainder is used in the month following purchase.
The following information is available for the months of June, July, and August, which are Paul’s busiest months:
June 1 cash balance $14,600.
June 1 supplies on hand $3,800.
June 1 accounts receivable $8,000.
June 1 accounts payable $3,700.
Estimated sales for June, July, and August are $24,000, $36,000, and $38,000, respectively.
Sales during May were $22,000, and sales during April were $16,000.
Estimated purchases for June, July, and August are $9,000, $17,000, and $12,000, respectively.
Purchases in May were $5,000.
Required: 1. Compute budgeted cash receipts and budgeted cash payments for each month. June July August Budgeted Cash Receipts Budgeted Cash PaymentsExplanation / Answer
1.
Budgeted cash receipts:
$800
(16000×5%)
$7,700
(22000×35%)
$1,100
(22000×5%)
$14,400
(24000×60%)
$8,400
(24000×35%)
$1,200
(24000×35%)
$24,000
From July sales
$21,600
(36000×60%)
$12,600
(36000×35%)
$34,200
$22,800
(38000×60%)
$22,800
Budgeted cash payments:
$2,500
(5000×50%)
$4,500
(9000×50%)
$4,500
(9000×50%)
$8,500
(17000×50%)
$8500
(17000×50%)
$17,000
$6,000
($12000×50%)
$6,000
2.
Balances for August 31, Budgeted balance sheet:
June July August quarter From April sales$800
(16000×5%)
$800 From May sales$7,700
(22000×35%)
$1,100
(22000×5%)
$8,800 From June sales$14,400
(24000×60%)
$8,400
(24000×35%)
$1,200
(24000×35%)
$24,000
From July sales
$21,600
(36000×60%)
$12,600
(36000×35%)
$34,200
From August sales$22,800
(38000×60%)
$22,800
Total receipts $22,900 $31,100 $36,600 $90,600Related Questions
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