Paul's Pool Service provides pool cleaning, chemical application, and pool repairs for residential customers. Clients are...

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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 70 percent of their fees in the month the service is provided. In the month following service, Paul collects 25 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 $17,000. • June 1 supplies on hand $4,600. • June 1 accounts receivable $9,600. • June 1 accounts payable $4,500. • Estimated sales for June, July, and August are $28,800, $43,200, and $46,000, respectively. • Sales during May were $26,800, and sales during April were $19,200. • Estimated purchases for June, July, and August are $10,600, $20,200, and $14,400, respectively. • Purchases in May were $5,800. Required: 1. Compute 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: 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 70 percent of their fees in the month the service is provided. In the month following service, Paul collects 25 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 $17,000. • June 1 supplies on hand $4,600. • June 1 accounts receivable $9,600. • June 1 accounts payable $4,500. • Estimated sales for June, July, and August are $28,800, $43,200, and $46,000, respectively. • Sales during May were $26,800, and sales during April were $19,200. • Estimated purchases for June, July, and August are $10,600, $20,200, and $14,400, respectively. • Purchases in May were $5,800. Required: 1. Compute 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:

Answer rating: 100% (QA)

Solution 1 Computation of Budgeted cash receipts Particulars June July August Collecti... View the full answer