The budget director for Yardley Cleaning Services prepared the following list of
ID: 2478364 • Letter: T
Question
The budget director for Yardley Cleaning Services prepared the following list of expected selling and administrative expenses. All expenses requiring cash payments are paid for in the month incurred except salary expense and insurance. Salary is paid in the month following the month in which it is incurred. The insurance premium for six months is paid on October 1. October is the first month of operations; accordingly, there are no beginning account balances.
Required
a. Complete the schedule of cash payments for S&A expenses by filling in the missing amounts.
b. Determine the amount of salaries payable the company will report on its pro forma balance sheet at the end of the fourth quarter.
c. Determine the amount of prepaid insurance the company will report on its pro forma balance sheet at the end of the fourth quarter.
October November December Budgeted S&A; Expenses Equipment lease expense Salary expense Cleaning supplies nsurance expense Depreciation on computer Rent Miscellaneous expenses Total operating expenses Schedule of Cash Payments for S&A; Expenses Equipment lease expense Prior month's salary expense. 100% Cleaning supplies Insurance premium Depreciation on computer Rent Miscellaneous expenses Total disbursements for operating expenses $5,800$ 5,8005,800 7,600 2,720 3,040 1,800 2,400 2,100,1002,100 6,700 7,200 1,800 1,800 2,400 2,400 710 $ 22,390$ 22,730 $ 23,450 $ 22,290 $ 18,030 18,850Explanation / Answer
a.
b. Salaries payable = $7600 (i.e. the salaries of December month which are payable in January)
c. Prepaid Insurance = $5400 (i.e. the insurance charges for the month January to march as the same was pre-paid on October 1.)
Schedule for Cash payments of S&A expenses: October November December Equipment lease 5800 5800 5800 Prior months salaries 0 6700 7200 Cleaning supplies 2880 2720 3040 Insurance expenses 10800 0 0 Depreciation (being non-cash) 0 0 0 Rent expenses 2100 2100 2100 Miscelleneous expenses 710 710 710 Total disbursements for operating expenses $22290 $18030 $18850Related Questions
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