Paul’s Pool Service provides pool cleaning, chemical application, and pool repai
ID: 2445192 • 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 80 percent of their fees in the month the service is provided. In the month following service, Paul collects 15 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, 75 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 $15,400. • June 1 supplies on hand $4,200. • June 1 accounts receivable $8,700. • June 1 accounts payable $4,100. • Estimated sales for June, July, and August are $26,100, $39,200, and $41,900, respectively. • Sales during May were $24,500, and sales during April were $17,500. • Estimated purchases for June, July, and August are $9,600, $18,400, and $13,200, respectively. • Purchases in May were $5,300.
1. Compute budgeted cash receipts and budgeted cash payments for each month.
Budgeted Cash Receipts:
June=
July=
August=
Budgeted Cash Payments:
June=
July=
August=
Explanation / Answer
Cash Receipts JUNE April: 17500*5% 875 May:24500*15% 3675 June: 26100*80% 20880 25430 July: May:24500*5% 1225 June:26100*15% 3915 July:39200*80% 31360 36500 August: JUNE: 26100*5% 1305 July:39200*15% 5880 August: 33520 40705 Cash Payments June: May: 5300*50% 2650 June:9600*50% 4800 7450 July: June:9600*50% 4800 july(18400*50%) 9200 14000 August: July:(18400*50%) 9200 August(13200*50%) 6600 15800