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	$	18,500		$	18,500		$	18,500
Sales commissions (4 percent of sales)		2,700			2,700			2,700
Supplies expense		330			360			390
Utilities		1,400			1,400			1,400
Depreciation on store equipment		4,000			4,000			4,000
Rent		6,200			6,200			6,200
Miscellaneous		660			660			660
Total S&A expenses before interest	$	33,790		$	33,820		$	33,850

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	$	18,500		$	18,500		$	18,500
Sales commissions (4 percent of sales)		0			2,700			2,700
Supplies expense		330			360			390
Utilities		0			1,400			1,400
Rent		6,200			6,200			6,200
Miscellaneous		660			660			660
Total S&A expenses before interest	$	25690			29820			29850

2) Utilities payable = 1400

3) Sales commission payable = 2700