Schedule of cash payments for a service company EastGate Physical Therapy Inc. is planning its cash payments for operations for the first quarter (January-March), 2017. The Accrued Expenses Payable balance on January 1 is $15,000. The budgeted expenses for the next three months are as follows: Other operating expenses include $3,000 of monthly depreciation expense and $500 of monthly insurance expense that was prepaid for the year on May 1 of the previous year. Of the remaining expenses, 70% are paid in the month in which they are incurred, with the remainder paid in the following month. The Accrued Expenses Payable balance on January 1 relates to the expenses incurred in December. Prepare a schedule of cash payment s for operations for January, February, and March.

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To determine Budgeting is a process to prepare the financial statement by the manager to estimate the organization’s future actions. It is also helpful to satisfy the everyday activities. To Compute: The schedule of cash payments for operations. Explanation The following table shows the schedule of cash payments for operations. Company E Schedule of Cash Payments for operations For the three months ending March 31, 2017 Details January ($) February ($) March ($) Payments of prior month’s expense 15,000 26,430 (1) 32,610 (2) Payments of current month’s expense 61,670 (3) 76,090 (4) 81,130 (5) Total Payments 76,670 102,520 113,740 Table (1) Working Notes: Calculate the payments of prior month’s expense for February month. Total expenses = $91,600 Depreciation expense = $3,000 Insurance expense = $500 Paid percentage = 30% Payments of prior month's expense = ($91,600 − $ 3 , 000 − $ 500 ) × 30% = $ 26 , 430 (1) Calculate the payments of prior month’s expense for March month. Total expenses = $112,200 Depreciation expense = $3,000 Insurance expense = $500 Paid percentage = 30% Payments of prior month's expense = ($112,200 − $ 3 , 000 − $ 500 ) × 30% = $ 32 , 610 (2) Calculate the payments of current month’s expense for January month

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Financial & Managerial Accounting

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Carl Warren + 2 others

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Financial & Managerial Accounting

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Carl Warren + 2 others

Publisher: Cengage Learning

ISBN: 9781285866307

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To determine

Budgeting is a process to prepare the financial statement by the manager to estimate the organization’s future actions. It is also helpful to satisfy the everyday activities.

To Compute: The schedule of cash payments for operations.

Explanation of Solution

The following table shows the schedule of cash payments for operations.

Company E Schedule of Cash Payments for operations For the three months ending March 31, 2017
Details	January ($)	February ($)	March ($)
Payments of prior month’s expense	15,000	26,430 (1)	32,610 (2)
Payments of current month’s expense	61,670 (3)	76,090 (4)	81,130 (5)
Total Payments	76,670	102,520	113,740

Table (1)

Working Notes:

Calculate the payments of prior month’s expense for February month.

Total expenses = $91,600

Depreciation expense = $3,000

Insurance expense = $500

Paid percentage = 30%

Payments of prior month's expense = ($91,600 − $3,000 − $500) × 30%= $26,430 (1)

Calculate the payments of prior month’s expense for March month.

Total expenses = $112,200

Depreciation expense = $3,000

Insurance expense = $500

Paid percentage = 30%

Payments of prior month's expense = ($112,200 − $3,000 − $500) × 30%= $32,610 (2)

Calculate the payments of current month’s expense for January month

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