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, 80 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 $16,100. • June 1 supplies on hand $4,300. • June 1 accounts receivable $9,000. • June 1 accounts payable $4,200. • Estimated sales for June, July, and August are $27,000, $40,500, and $43,000, respectively. • Sales during May were $25,000, and sales during April were $18,000. • Estimated purchases for June, July, and August are $10,000, $19,000, and $13,500, respectively. • Purchases in May were $5,500. Required: 1. Compute budgeted cash receipts and budgeted cash payments for each month. June July August Budgeted Cash Receipts Budgeted Cash Payments

Answer 1

Answer:

1)

Budgeted cash receipt and payment are as under

	June	July	August
Total budgeted cash receipt	25850	35000	41325
Total budgeted cash payment	7750	14500	16250

Working notes for the above answer is as under

1

5 June July August 6 Budgeted cash recipt 7 Collection from April sells 8 Collection from May sells 9 Collection from June sells 10 Collection from July sells 11 Collection from August sells 12 Total budgeted cash recipt 900 8750 162001 12501 9450 24300 13501 14175 25800 41325 25850 35000 13 14 | | | | 2750 5000 15 Budgeted cash payment 16 Payment for may purchase 17 Payment for June purchase 18 Payment forJuly purchase 19 Payment for August purchase 20 Total budgeted cash payment 5000 9500 9500 6750 16250 7750 14500

2

Ε 5 June July August 6 Budgeted cash recipt 7 Collection from April sells 8 Collection from May sells 9 Collection from June sells 10 Collection from July sells 11 Collection from August sells 12 Total budgeted cash recipt =18000*5% =25000*35% =27000*60% =25000*5% =27000*35% -40500*60% =27000*5% -40500*35% -43000*60% =SUM(E7:E11) =SUM(C7:011) =SUM(D7:011) 13 14 =5500*50% =10000*50% 15 Budgeted cash payment 16 Payment for may purchase 17 Payment for June purchase 18 Payment forJuly purchase 19 Payment for August purchase 20 Total budgeted cash payment =10000*50% =19000*50% =19000*50% =13500*50% =SUM(E16:E19) =SUM(C16:C19) =SUM(D16:019)