Green Mountain Financial Inc. was organized on February 28, 2014. Projected sell

Question

Green Mountain Financial Inc. was organized on February 28, 2014. Projected selling and administrative expenses for each of the first three months of operations are as follows: Depreciation, insurance, and property taxes represent $8,000 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. Sixty percent 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.

Explanation / Answer

march April may Expense for the month 45800 56900 71000 Less:depreciation ,Insurance ,property tax -8000 -8000 -8000 net expense 37800 48900 63000 60% of current expense 22680   [37800*.60] 29340    [48900*.60] 37800     [63000*.60] 40% of last month expense 15120   [37800*.40] 19560   [48900*.40] cash payment 22680 44460 57360

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