Select Physical Therapy Inc. is planning its cash payments for operations for th
ID: 2367231 • Letter: S
Question
Select Physical Therapy Inc. is planning its cash payments for operations for the third quarter (July-September), 2013. The Accrued Expenses Payable balance on July 1 is $25,000. The budgeted expenses for the next three months are as follows: July August September Salaries $57,500 $70,000 $77,500 Utilities 4,800 5,300 6,300 Other operating expenses 43,700 47,600 52,400 Total $106,000 $122,900 $136,200 Other operating expenses include $3,200 of monthly depreciation expense and $700 of monthly insurance expense that was prepaid for the year on March 1 of the current 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 July 1 relates to the expenses incurred in June. Prepare a schedule of cash payments for operations for July, August, and September. July Aug Sept Payments of prior month's expense Payment of current month's expense Total paymentExplanation / Answer
Following is the payment schedule for the third quarter (July - September) 2013 payments Schedule June July Aug Sep Oct Opening Balance $25,000 $31,755 $37,694 $42,849 Salaries $57,500 $70,000 $77,500 Utilities $4,800 $5,300 $6,300 Other Op expenses $39,800 $43,700 $49,900 Total payments $127,100*75= $95,325 $150,775*75%=$113,081 $171,394*75%= $128,545 balnce C/F $25,000 $31,755 $37,694 $42,849 As depriciation is a non cash item and insurance is already being paid in advance so we deduct these expenses from "Other Operating expenses", so July =$43,700-($3,200+$700)= $39,800, Aug= $47,600-($3,200+$700)= $43,700, and Sep=$52,400-($3,200+$700) =$49,900