Question

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 $31,200. The budgeted expenses for the next three months are as follows:

	January		February		March
Salaries	$71,800		$87,400		$96,700
Utilities	5,900		6,600		7,800
Other operating expenses	55,300		60,300		66,400
Total	$133,000		$154,300		$170,900

Other operating expenses include $3,900 of monthly depreciation expense and $900 of monthly insurance expense that was prepaid for the year on May 1 of the previous year. Of the remaining expenses, 70% 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
Payments of prior month's expense	$	$	$
Payments of current month's expense
Total cash payments	$	$	$

Answer 1

Solution

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	$ 31,200	$ 38,460	$ 44,850
Payments of current month's expense	$ 89,740	$ 104,650	$ 116,270
Total cash payments	$ 120,940	$ 143,110	$ 161,120

Working

	January	February	March
Total operating expenses	$ 133,000	$ 154,300	$ 170,900
Less: Non cash expenses	$ 4,800	$ 4,800	$ 4,800
Total cash expenses	$ 128,200	$ 149,500	$ 166,100
Paid in current month	$ 89,740	$ 104,650	$ 116,270
Paid in next month	$ 38,460	$ 44,850	$ 49,830