Schedule of Cash Payments Select Physical Therapy Inc. is planning its cash paym

Question

Schedule of Cash Payments

Select Physical Therapy Inc. is planning its cash payments for operations for the third quarter (July–September), 2015. The Accrued Expenses Payable balance on July 1 is $31,000. Thebudgeted expenses for the next three months are as follows:

Other operating expenses include $3,900 of monthly depreciation expense and $900 of monthly insurance expense that was prepaid for the year on March 1 of the current year. Of the remaining expenses, 75% are paid in the month in which they are incurred, with the remainder paid in the following month. The Accrued Expenses Payable balance on July 1 relates to the expenses incurred in June.

Prepare a schedule of cash payments for operations for July, August, and September.

Select Physical Therapy Inc.

Schedule of Cash Payments for Operations

For the Three Months Ending September 30, 2015

July

August

September

Payments of prior month's expense

$  

$  

$  

Payments of current month's expense

  

  

  

Total payment

$  

$  

$  

July August September Salaries $71,300 $86,800 $96,100 Utilities 5,900 6,500 7,800 Other operating expenses 54,900 59,800 65,900 Total $132,100 $153,100 $169,800

Explanation / Answer

The cash 'other operating expenses' of each month, has to be reduced by 3900 depreciation (non cash expenditure and 900 insurance prepaid, as they are not cash flows for the period.

The other operating expenses - cash flows would then be 50100, 55000 and 61100 for the months of July, August and September, respectively

Schedule of cash payments for operations for the three months ending 30th Sptember 2015

Note: it is assumed that the 75%/25% ratio of payments is applicable to salaries and utilities also. Other wise they have to be taken at 100%

July August September Payments of prior month's expense 31000 31825 37075 Payments of current month's expense 95475 111225 123750 126475 143050 160825

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