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 $ $ $

Homework Answers

Answer #1
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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