Thornton is a retail company specializing in men’s hats. Its budget director pre
ID: 2536992 • Letter: T
Question
Thornton is a retail company specializing in men’s hats. Its budget director prepared the list of expected operating expenses that follows. All items are paid when incurred except sales commissions and utilities, which are paid in the month following their incurrence. July is the first month of operations, so there are no beginning account balances.
July
August
September
Salary expense
$
18,000
$
18,000
$
18,000
Sales commissions (4 percent of sales)
3,700
3,700
3,700
Supplies expense
310
340
370
Utilities
3,000
3,000
3,000
Depreciation on store equipment
2,500
2,500
2,500
Rent
6,500
6,500
6,500
Miscellaneous
710
710
710
Total S&A expenses before interest
$
34,720
$
34,750
$
34,780
Required
a. Prepare a schedule of cash payments for selling and administrative expenses.
b. Determine the amount of utilities payable as of September 30.
c. Determine the amount of sales commission’s payable as of September 30.
Prepare a schedule of cash payments for selling and administrative expenses.
Schedule of Cash Payments for S&A Expenses
July
August
September
Salary expense
Sales commissions
Supplies expense
Utilities
0
0
0
Rent
Miscellaneous
Total payments for S&A expenses
Determine the amount of utilities payable and sales commissions’ payable as of September 30.
b.
Utilities payable
c.
Sales commissions payable
July
August
September
Salary expense
$
18,000
$
18,000
$
18,000
Sales commissions (4 percent of sales)
3,700
3,700
3,700
Supplies expense
310
340
370
Utilities
3,000
3,000
3,000
Depreciation on store equipment
2,500
2,500
2,500
Rent
6,500
6,500
6,500
Miscellaneous
710
710
710
Total S&A expenses before interest
$
34,720
$
34,750
$
34,780
Explanation / Answer
Req A: JULY AUGUST SEPTEMBER Salaries expense 18000 18000 18000 Sales Commission 3700 3700 Supplies expense 310 340 370 Utilities expense 3000 3000 Depreciation 0 0 0 Rent Expense 6500 6500 6500 Misc. expense 710 710 710 Total payment for S& A expense 25520 32250 32280 Req B: Utilities Payable as on Sep 30: $3,000 As the September month expense is payable in next month. Req C. Sales Commission payable as on Sep 30: $ 3700 As the September month expense is payable in next month. b. utilities payable $3,000 c. Sales commission payable $3,700
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