Question

Schedule of Cash Payments

EastGate Physical Therapy Inc. is planning its cash payments for operations for the first quarter (January–March). The Accrued Expenses Payable balance on January 1 is $29,300. The budgeted expenses for the next three months are as follows:

	January		February		March
Salaries	$67,400		$82,000		$90,800
Utilities	5,600		6,200		7,300
Other operating expenses	51,900		56,600		62,300
Total	$124,900		$144,800		$160,400

Other operating expenses include $3,700 of monthly depreciation expense and $800 of monthly insurance expense that was prepaid for the year on May 1 of the previous year. Of the remaining expenses, 80% are paid in the month in which they are incurred, with the remainder paid in the following month. The Accrued Expenses Payable balance on January 1 relates to the expenses incurred in December.

Prepare a schedule of cash payments for operations for January, February, and March.

EastGate Physical Therapy Inc.
Schedule of Cash Payments for Operations
For the Three Months Ending March 30
	January	February	March
Payments of prior month's expense	$	$	$
Payments of current month's expense
Total payments	$	$	$

Answer 1

EastGate Physical Therapy Inc.
Schedule of Cash Payments for Operations
For the Three Months Ending March 30
	January	February	March
Payments of prior month's expense	29300	24080	28060
Payments of current month's expense	96320	112240	124720
Total payments	125620	136320	152780

Workings:
	January	February	March
Payments of prior month's expense	29300	=(124900-3700-800)*20%	=(144800-3700-800)*20%
Payments of current month's expense	=(124900-3700-800)*80%	=(144800-3700-800)*80%	=(160400-3700-800)*80%