Question

Ruddy is a retail company specializing in men’s hats. Its budget director prepared the list of expected operating expenses that follows. All items are paid when incurred except sales commissions and utilities, which are paid in the month following their incurrence. July is the first month of operations, so there are no beginning account balances.

	July			August			September
Salary expense	$	17,600		$	17,600		$	17,600
Sales commissions (4 percent of sales)		3,700			3,700			3,700
Supplies expense		310			340			370
Utilities		1,300			1,300			1,300
Depreciation on store equipment		2,800			2,800			2,800
Rent		5,700			5,700			5,700
Miscellaneous		700			700			700
Total S&A expenses before interest	$	32,110		$	32,140		$	32,170

Required

a.	Prepare a schedule of cash payments for selling and administrative expenses.

    

b.	Determine the amount of utilities payable as of September 30.

    

c.	Determine the amount of sales commissions payable as of September 30.

     

Answer 1

a.	Prepare a schedule of cash payments for selling and administrative expenses.

July			August			September
Salary expense	$	17,600		$	17,600		$	17,600
Sales commissions (4 percent of sales)		0			3,700			3,700
Supplies expense		310			340			370
Utilities		0			1,300			1,300
Rent		5,700			5,700			5,700
Miscellaneous		700			700			700
Total S&A expenses before interest	$	24310			32,140		$	32,170

b) Utilities payable = 1300

c) Sales commission payable = 3700