In: Accounting
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, 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:
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: