Paul\'s Pool Service provides pool cleaning, chemical application, and pool repa
ID: 2514506 • 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 $17,200 June 1 supplies on hand $4,800 . June 1 accounts receivable $9,900 June 1 accounts payable $4,700 Estimated sales for June, July, and August are $29,700, $44,600, and $47,900, respectively Sales during May were $28,100, and sales during April were $19,900 Estimated purchases for June, July, and August are $10,800, $20,800, and $15,000, respectively Purchases in May were $5,900 Required 1. Compute budgeted cash receipts and budgeted cash payments for each month June August Budgeted Cash Receipts Budgeted Cash PaymentsExplanation / Answer
Solution 1:
Note: It is assumed that Cash received from opening Accounts Receivable in July is 5% of May Sale (i.e. $28100*5% = $1405) and the remaining Accounts receivale (i.e. $9900 - $1405 = $8495) is received in June month.
Solution 2:
Schedule of Budgeted Cash Receipts and Budgeted Cash Payments Particulars June July August Total Budgeted Cash Receipts Cash received for Opening account Receivable $8,495.00 $1,405.00 $9,900.00 Cash received for june Sale $17,820.00 $10,395.00 $1,485.00 $29,700.00 Cash received for july Sale $26,760.00 $15,610.00 $42,370.00 Cash received for August Sale $28,740.00 $28,740.00 Total Budgeted Cash receipts $26,315.00 $38,560.00 $45,835.00 $110,710.00 Budgeted Cash Payments Cash payment for Account Payable $4,700.00 $4,700.00 Cash Payment for June Purchases $5,400.00 $5,400.00 $10,800.00 Cash Payment for July Purchases $10,400.00 $10,400.00 $20,800.00 Cash Payment for August Purchases $7,500.00 $7,500.00 Total Budgeted Cash Payments $10,100.00 $15,800.00 $17,900.00 $43,800.00