Question

5

Schedule of Cash Payments for a Service Company

SafeMark Financial Inc. was organized on February 28. Projected selling and administrative expenses for each of the first three months of operations are as follows:

March	$145,800
April	134,100
May	122,000

Depreciation, insurance, and property taxes represent $31,000 of the estimated monthly expenses. The annual insurance premium was paid on February 28, and property taxes for the year will be paid in June. 67% of the remainder of the expenses are expected to be paid in the month in which they are incurred, with the balance to be paid in the following month.

Prepare a schedule indicating cash payments for selling and administrative expenses for March, April, and May.

SafeMark Financial Inc.
Schedule of Cash Payments for Selling and Administrative Expenses
For the Three Months Ending May 31
	March	April	May
March expenses:
Paid in March	$
Paid in April		$
April expenses:
Paid in April
Paid in May			$
May expenses:
Paid in May
Total cash payments	$	$	$

Answer 1

Schedule of Cash payments:

SafeMark Financial Inc.
Schedule of Cash Payments for Selling and Administrative Expenses
For the Three Months Ending May 31
	March	April	May
March expenses:
Paid in March	$76,916
Paid in April		$37,884
April expenses:
Paid in April		69,077
Paid in May			$34,023
May expenses:
Paid in May			60,970
Total cash payments	$76,916	$106,961	$94,993

Since 31,000 is not paid in any of these months, it is subtracted and 67% of remainder is paid in the same month and 33% in the next.