Question

# EastGate Physical Therapy Inc. is planning its cash payments for operations for the first quarter (January–March)....

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 \$26,800. The budgeted expenses for the next three months are as follows:

 January February March Salaries \$61,600 \$75,000 \$83,100 Utilities 5,100 5,600 6,700 Other operating expenses 46,800 51,000 56,200 Total \$113,500 \$131,600 \$146,000

Other operating expenses include \$3,400 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, 75% 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. Enter all amounts as positive numbers.

 EastGate Physical Therapy Inc. Schedule of Cash Payments for Operations For the Three Months Ending March 31 January February March \$ \$ \$ Total cash payments \$ \$ \$

 EastGate Physical Therapy Inc. Schedule of Cash Payments for Operations For the Three Months Ending March 31 January February March Payments of prior month's expense 26800 27325 31850 Payments of current month's expense 81975 95550 106350 Total cash payments 108775 122875 138200 Workings: Payments of prior month's expense: January = \$26800 February =(113500-3400-800)*25%= \$27325 March=(131600-3400-800)*25% = \$31850 Payments of current month's expense: January =(113500-3400-800)*75%= \$81975 February =(131600-3400-800)*75%=\$95550 March = (146000-3400-800)*75%=\$106350

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