Paul\'s Pool Service provides pool cleaning, chemical application, and pool repa
ID: 2436906 • 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 August Budgeted Cash Receipts Budgeted Cash PaymentsExplanation / Answer
Budgeted cash receipts for June = 60% of June sales + 35% of May sales + 5% of April sales
= (24,000*60%) + (22,000*35%) + (16,000*5%)
= 14,400 + 7,700 + 800
= 22,900
Budgeted cash receipts for July = 60% of July sales + 35% of June sales + 5% of May sales
= (36,000*60%) + (24,000*35%) + (22,000*5%)
= 21,600 + 8,400 + 1,100
= 31,100
Budgeted cash receipts for August = 60% of August sales + 35% of July sales + 5% of June sales
= (38,000*60%) + (36,000*35%) + (24,000*5%)
= 22,800 + 12,600 + 1,200
= 36,600
Budgeted cash payments for June = 50% of June purchases + 50% of May purchases
= (9,000*50%) + (5,000*50%)
= 4,500 + 2,500
= 7,000
Budgeted cash payments for July = 50% of July purchases + 50% of June purchases
= (17,000*50%) + (9,000*50%)
= 8,500 + 4,500
= 13,000
Budgeted cash payments for August = 50% of August purchases + 50% of July purchases
= (12,000*50%) + (17,000*50%)
= 6,000 + 8,500
= 14,500
Balances for August 31 Budgeted Balance Sheet
June July August Budgeted cash receipts 22,900 31,100 36,600 Budgeted cash payments 7,000 13,000 14,500