E$8-24$ Determining Balances for a Budgeted Balance Sheet

LO $8-4$

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, $$14,600.$

June $1$ supplies on hand, $$3,800.$Paul$$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 which are Paul$$s busiest months: for the months of June, July, and August, June $1$ cash balance, $$14,600.$ June $1$ supplies on hand, $$3,800.$E$8-24$ Determining Balances for a Budgeted Balance Sheet

LO $8-4$

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, $$14,600.$

June $1$ supplies on hand, $$3,800.$June $1$ accounts receivable, $$8,000.$

June $1$ accounts payable, $$3,700.$

Estimated sales for June, July, and August are $$24,000,$$$36,000,$ and $$38,000,$

respectively.

Sales during May were $$22,000,$ and sales during April were $$16,000.$

Estimated purchases for June, July, and August are $$9,000,$$$17,000,$ and $$12,000,$

respectively.

Purchases in May were $$5,000.$

Required:

$1.$ Prepare budgeted cash receipts and budgeted cash payments for each month.

$2.$ Compute the balances necessary to prepare a budgeted balance sheet for August $31$

for each of the following accounts:

Cash

Supplies Inventory

Accounts Receivable

Accounts Payable