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 $1,620. • June 1 accounts receivable $16,010. • June 1 accounts payable $2,700. • Estimated sales for June, July, and August are $25,900, $38,900, and $41,100, respectively. • Sales during May were $23,800, and sales during April were $17,300. • Estimated purchases for June, July, and August are $9,700, $18,300, and $12,900, 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

Answer 1

	June	July	August	Total
Budgeted cash receipts	23990	30890	38480	93360
Budgeted cash payments	7550	14000	15600	37150

Cash
June 1 Balance	16700
Add: Total cash receipts	93360
Less: Total cash payments	37150
August 31 Balance	72910
Supplies Inventory
30% of August Purchases	3870
Accounts Receivable
60% of August sales	24660
10% of July sales	3890
Balance at August 31	28550
Accounts Payable
50% of August Purchases	6450

Notes:-

Month	Sales	Purchases
April	17300
May	23800	5400
June	25900	9700
July	38900	18300
Aug	41100	12900

	Collections each month
Amt. of sales each month	April	May	June	July	Aug
17300	6920	8650	1730
23800		9520	11900	2380
25900			10360	12950	2590
38900				15560	19450
41100					16440
	6920	18170	23990	30890	38480

	Payments each month
Amt. of Purchases each month	April	May	June	July	Aug
5400		2700	2700
9700			4850	4850
18300				9150	9150
12900					6450
	0	2700	7550	14000	15600

	Usage of supplies each month
Amt. of Purchases each month	April	May	June	July	Aug
5400		3780	1620
9700			6790	2910
18300				12810	5490
12900					9030
	0	3780	8410	15720	14520

Supplies
June 1 Balance	1620
Add: Purchases	9700
Less: Usage	8410
July 1 Balance	2910
Add: Purchases	18300
Less: Usage	15720
Aug 1 Balance	5490
Add: Purchases	12900
Less: Usage	14520
Aug 31 Balance	3870