Schedule of Cash Payments for a Service Company SafeMark Financial Inc. was orga

Question

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:

Depreciation, insurance, and property taxes represent $29,000 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. 61% 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.

March $136,100 April 127,900 May 116,400

Explanation / Answer

Schedule of Cash Payments for Selling and Administrative Expenses

march april may March expenses: (136,100 - $29,000 = 107100) Paid in March (107100*61%) 65331 Paid in April (107100 * 39%) 41769 April expenses: (127,900 - $29,000 = 98900) Paid in April (98900 * 61%) 60329 Paid in May (98900 * 39%) 38571 May expenses: Paid in May [(116,400 - 29000) * 61%] 53314 Total cash payments $65331 $102098 $91885

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