SafeMark Financial Inc. was organized on February 28. Projected selling and admi

Question

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 $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.

March $78,400 April 83,500 May 96,900

Explanation / Answer

Solution:-

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SafeMark Financial Inc. Schedule of Cash Payments for Selling and Administrative Expenses For the Three Months Ending May 31 March April May March expenses: Paid in March $ 47,880 Paid in April $ 20,520 April expenses: Paid in April $ 51,450 Paid in May $ 22,050 May expenses: Paid in May $60,830 Total cash payments $ 47,880 $ 71,970 $ 82,880

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