Question

1. Schedule of cash payments for a service company

   Horizon 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	$116,400
   April	110,600
   May	100,600

   Depreciation, insurance, and property taxes represent $25,000 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. 66% 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 of cash payments for selling and administrative expenses for March, April, and May.

   Horizon 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	$
   Paid in April		$
   April expenses:
   Paid in April
   Paid in May			$
   May expenses:
   Paid in May
   Total cash payments	$	$	$

Answer 1

Prepare a schedule of cash payments for selling and administrative expenses for March, April, and May.

Horizon 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	(116400-25000)*66% = 60324
Paid in April		$31076
April expenses:
Paid in April		(110600-25000)*66% = 56496
Paid in May			$29104
May expenses:
Paid in May			(100600-25000)*66% = 49896
Total cash payments	$60324	$87572	$79000