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 50 percent of their fees in the month the service is provided. In the month following service, Paul collects 40 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 $14,500. June 1 supplies on hand $3,900. June 1 accounts receivable $8,100. June 1 accounts payable $3,800. Estimated sales for June, July, and August are $24,300, $36,500, and $38,900, respectively. Sales during May were $22,700, and sales during April were $16,300. Estimated purchases for June, July, and August are $9,000, $17,200, and $12,300, respectively. Purchases in May were $5,000. 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: Compute the balances necessary to prepare a budgeted balance sheet for August 31 for each of the following accounts: Balances for August 31 Budgeted Balance Sheet Cash June 1 Balance Add: Total Cash Receipts Less: Total Cash Payments August 31 Balance Supplies Inventory 30% of August Purchases Accounts Receivable 50% of August Sales 10% of July Sales Balance at August 31 Accounts Payable 50% of August Purchases

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter6: Business Expenses

Section: Chapter Questions

Problem 71IIP

See similar textbooks

Related questions

Concept explainers

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 50 percent of their fees in the month the service is provided. In the month following service, Paul collects 40 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 $14,500.
June 1 supplies on hand $3,900.
June 1 accounts receivable $8,100.
June 1 accounts payable $3,800.
Estimated sales for June, July, and August are $24,300, $36,500, and $38,900, respectively.
Sales during May were $22,700, and sales during April were $16,300.
Estimated purchases for June, July, and August are $9,000, $17,200, and $12,300, respectively.
Purchases in May were $5,000.

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:

Compute the balances necessary to prepare a budgeted balance sheet for August 31 for each of the following accounts:

Balances for August 31 Budgeted Balance Sheet
Cash
June 1 Balance
Add: Total Cash Receipts
Less: Total Cash Payments
August 31 Balance
Supplies Inventory
30% of August Purchases
Accounts Receivable
50% of August Sales
10% of July Sales
Balance at August 31
Accounts Payable
50% of August Purchases

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions