EastGate Physical Therapy Inc. is planning its cash payments for operations for

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 $26,900. The budgeted expenses for the next three months are as follows: January February March Salaries $61,900 $75,300 $83,400 Utilities 5,100 5,600 6,700 Other operating expenses 47,000 51,200 56,400 Total $114,000 $132,100 $146,500 Other operating expenses include $3,400 of monthly depreciation expense and $800 of monthly insurance expense that was prepaid for the year on May 1 of the previous 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 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.

Explanation / Answer

JAN FEB MARCH Budgeted CASH EXPENSES: Salaries 61900 75300 83400 Utilities 5100 5600 6700 Other operating expense 47000 51200 56400 Total Budgeted Cash expense 114000 132100 146500 Cash disbursals: Accrued expense on jan1 26900 Budgeted Cash expense of Jan 85500 28500 (75% in same month and remaining in Next month (114000*75%) (114000*25%) Budgeted Cash expense of Feb 99075 33025 (75% in same month and remaining in Next month (132100*75%) (132100*25%) Budgeted Cash expense of March 109875 (75% in same month and remaining in Next month (146500*75%) Cash payments for months 112400 127575 142900

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