Question

Hector Company reports the following:      July August September Sales $ 15,000 $ 23,000 $ 27,000...

Hector Company reports the following:

    

July August September
Sales $ 15,000 $ 23,000 $ 27,000
Purchases 9,000 13,800 15,000


Payments for purchases are made in the month after purchase. Selling expenses are 16% of sales, administrative expenses are 11% of sales, and both are paid in the month of sale. Rent expense of $2,100 is paid monthly. Depreciation expense is $1,400 per month.

Prepare a schedule of budgeted cash payments for August and September.

HECTOR COMPANY
Budgeted Cash Payments
For August and September
August September
Payments for:
Business   Accounting   
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Answer #1
HECTOR COMPANY
Budgeted Cash Disbursements
For August and September
August September
Payments for merchandise 9000 13800
Selling expenses 3680 4320
Administrative expenses 2530 2970
Rent expense 2100 2100
Total cash disbursements 17310 23190
Workings:
Selling expenses:
August = 23000*16%=$3680
September=27000*16%=$4320
Administrative expenses:
August = 23000*11%=$2530
September=27000*11%=$2970
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