The budget director for Baird Cleaning Services prepared the following list of e
ID: 2531899 • Letter: T
Question
The budget director for Baird 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
Complete the schedule of cash payments for S&A expenses by filling in the missing amounts.
Determine the amount of salaries payable the company will report on its pro forma balance sheet at the end of the fourth quarter.
Determine the amount of prepaid insurance the company will report on its pro forma balance sheet at the end of the fourth quarter. Complete this question by entering your answers in the tabs below.
Req A
Req B and C
Complete the schedule of cash payments for S&A expenses by filling in the missing amounts.
Complete this question by entering your answers in the tabs below.
Req A
Req B and C
Determine the amount of salaries payable and prepaid insurance the company will report on its pro forma balance sheet at the end of the fourth quarter.
Explanation / Answer
Salaries payable : As per the information given in the above question Salary of a particular is paid in the following month therefore the salary of december month will be paid in first month of next quarter hence at the end of fourth quarter the salary payable will be $7,800
Insurance prepaid : As per the information given in the above question the insurance premium of $1400 is paid on october 1 for the period of six month. Therefore an expense of $700 would be recognized a period of 2 quarter
Hence at the end of first quarter insurance premium of $700 would be shown as prepaid insurance.
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