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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Schedule of cash payments for a service company

SafeMark Financial Inc. was organized on February 28. Projected selling and administrative expenses for each of the first three months of operations are as follows:

March 578,400
April 83,500
May 96,900

Depreciation, insurance, and property taxes represent $10,000 of the estimated monthly expenses. The annual insurance premium was paid on February 28, and property taxes for the year will be paid in June. Seventy percent of the remainder of the expenses are expected to be paid in the month in which they are incurred, with the balance to be paid in the following month.

Prepare a schedule indicating cash payments for selling and administrative expenses for March, April, and May.

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 selling and administrative expenses.

Explanation

The following table shows the schedule of cash payments for selling and administrative expenses.

Company S

Schedule of Cash Payments for Selling and Administrative Expenses

For the three months ending May 31

Details March ($) April ($) May ($)
March expenses:
   Paid in March [($78,400 - $10,000) × 70%] 47,880
   Paid in April [($78,400 - $10,000) × 30%] 20,520

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