Paul\'s Pool Service provides pool cleaning, chemical application, and pool repa
ID: 2438668 • 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 40 percent of their fees in the month the service is provided. In the month following service, Paul collects 50 percent of service fees. The final 10 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, 70 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 $16,700 June 1 supplies on hand $4,500. . June 1 accounts receivable $9,400 June 1 accounts payable $4,400 Estimated sales for June, July, and August are $28,200, $42,300, and $45,000, respectively Sales during May were $26,200, and sales during April were $18,800 Estimated purchases for June, July, and August are $10,400, $19,800, and $14,100, respectively. Purchases in May were $5,700. Required 1. Compute budgeted cash receipts and budgeted cash payments for each month. June July August Budgeted Cash Receipts Budgeted Cash PaymentsExplanation / Answer
Budgeted cash receipts for June = 40% of June sales + 50% of May sales + 10% of April sales
= (28,200*40%) + (26,200*50%) + (18,800*10%)
= 11,280 + 13,100 + 1,880
= 26,260
Budgeted cash receipts for July = 40% of July sales + 50% of June sales + 10% of May sales
= (42,300*40%) + (28,200*50%) + (26,200*10%)
= 16,920 + 14,100 + 2,620
= 33,640
Budgeted cash receipts for August = 40% of August sales + 50% of July sales + 10% of June sales
= (45,000*40%) + (42,300*50%) + (28,200*10%)
= 18,000 + 21,150 + 2,820
= 41,970
Budgeted cash payments for June = 50% of June purchases + 50% of May purchases
= (10,400*50%) + (5,700*50%)
= 5,200 + 2,850
= 8,050
Budgeted cash payments for July = 50% of July purchases + 50% of June purchases
= (19,800*50%) + (10,400*50%)
= 9,900 + 5,200
= 15,100
Budgeted cash payments for August = 50% of August purchases + 50% of July purchases
= (14,100*50%) + (19,800*50%)
= 7,050 + 9,900
= 16,950
2.
Balances for August 31 Budgeted Balance Sheet
June July August Budgeted cash receipts 26,260 33,640 41,970 Budgeted cash payments 8,050 15,100 16,950