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Oakwood Financial Inc. was organized on February 28. Projected selling and administrative expenses for each of the first three months of operations are as follows:
March $132,700
April 124,700
May 113,500
Depreciation, insurance, and property taxes represent $28,000 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. 73% 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.

Sagot :

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Answer:

Results are below.

Explanation:

First, we must deduct the depreciation expense from each month. Depreciation is not a cash disbursement, and insurance and taxes are paid once a year.

March= 132,700 - 28,000= 104,700

April= 124,700 - 28,000= 96,700

May= 113,500 - 28,000= 85,500

Now, the cash disbursements for each month:

March:

Selling and administrative costs from March= 104,700*0.73= 76,431

Total cash disbursement= 76,431

April:

Selling and administrative costs from March= 104,700*0.27= 28,269

Selling and administrative costs from April= 96,700*0.73= 70,591

Total cash disbursement= $98,860

May:

Selling and administrative costs from May= 85,500*0.73= 62,415

Selling and administrative costs from April= 96,700*0.27= 26,109

Total cash disbursement= $88,524

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