Paul\'s Pool Service provides pool cleaning, chemical application, and pool repa
ID: 2509300 • 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, 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 $15,700 June 1 supplies on hand $4,300 June 1 accounts receivable $8,900 June 1 accounts payable S4,200 Estimated sales for June, July, and August are $26,700, $40,100, and $42,900, respectively. Sales during May were $25,100, and sales during April were $17,900 Estimated purchases for June, July, and August are $9,800, $18,800, and $13,500, respectively Purchases in May were $5,400 . . . Required 1. Compute budgeted cash receipts and budgeted cash payments for each month. June July August Budgeted Cash Receipts Budgeted Cash Payments 2. Compute the balances necessary to prepare a budgeted balance sheet for August 31 for each of the following accounts Balances for August 31 Budgeted Balance Sheet Cash June 1 Balance Add: Total Cash Receipts Less: Total Cash Payments August 31 Balance Supplies Inventory 30% of August Purchases Accounts Receivable 40% of August Sales 5% of July Sales Balance at August 31 Accounts Payable 50% of August PurchasesExplanation / Answer
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June July August quarter From April sales $895.00 $895.00 From May sales $8,785.00 $1,255.00 $10,040.00 From June sales $16,020.00 $9,345.00 $1,335.00 $26,700.00 From July sales $24,060.00 $14,035.00 $38,095.00 From August sales $25,740.00 $25,740.00 Total receipts $25,700.00 $34,660.00 $41,110.00 $1,01,470.00 Budgeted cash payments: June July August quarter From May purchases $2,700.00 $2,700.00 From June purchases $4,900.00 $4,900.00 $9,800.00 From July purchases $9,400.00 $9,400.00 $18,800.00 From August purchases $6,750.00 $6,750.00 Total payments $7,600.00 $14,300.00 $16,150.00 $38,050.00 Balances for August 31, Budgeted balance sheet: Cash: June 1 balance $15,700.00 Add total cash receipts $1,01,470.00 Less total cash payments $38,050.00 August 31, balance $79,120.00 Supplies Inventory: 15% if August purchases $4,050.00 Account receivable: 40% of August sales(38000×40%) $17,160.00 5% of July sales(36000×5%) $2,005.00 Balance at August 31 $19,165.00 Account payable: 50% of August purchases(12000×50%) $6,750.00