The budget director for Yardley Cleaning Services prepared the following list of

Question

The budget director for Yardley Cleaning Services prepared the following list of expected selling and administrative expenses. All expenses requiring cash payments are paid for in the month incurred except salary expense and insurance. Salary is paid in the month following the month in which it is incurred. The insurance premium for six months is paid on October 1. October is the first month of operations accordingly, there are no beginning account balances. Required a. Complete the schedule of cash payments for S&A; expenses by filling in the missing amounts Budgeted S&A; Expenses Equipment lease expense Salary expense Cleaning supplies Insurance expense Depreciation on computer Rent Miscellaneous expenses Total operating expenses Schedule of Cash Payments for S&A; Expenses Equipment lease expense Prior month s"salary expense, 100% Cleaning supplies Insurance premium Depreciation on computer Rent $ 6,800 $ 6,800 6,800 ,400 6 7,300 2,8302,7803,070 1,500 1,500 1,500 2.100| | 2.100| 2.100 2,100 2,100 2,100 690 22,420 22,870 $ 23,560 690 690 Total disbursements for operating expenses $ 21.420 S 18,770 $ 19,560 Type here to search

Explanation / Answer

Answer =A) SCHEDULE OF THE CASH PAYMENT FOR S & A EXPENSES October   November December Equipment Lease Expenses $              6,800 $               6,800 $               6,800 Salary Expneses (Prio monthly expenses 100%)                    6,400                    6,900 Cleanining Expenses $              2,830 $               2,780 $               3,070 Insurance Expenses $              9,000 Depreciation on Computer $                     -   $                      -   $                      -   Rent   $              2,100 $               2,100 $               2,100 Miscllaneouss Expenses $                  690 $                   690 $                   690 Total $      21,420.00 $       18,770.00 $       19,560.00 Notes: 1) Depreciation Expenses have no cash expenses element. Notes : 2) Inurance expneses is paid for the six month in the month of October only. Answer = b) Amount of salary Payable for the month of December = $ 7,300 Answer = C insurance Paid = Insurance Expenses Per month X paid for 6 month Prepaid insurance = $ 1500 X 6 month = $ 9,000 Expenses already recoginized for 3 months = $ 1500 X 3 months = $ 4,500   Prepaid insurance = Insurance Paid - Expneses realize Prepaid insurance = $ 9,000 - $ 4,500 Prepaid insurance = $ 4,500 So, Amount shown in the balance sheet as prepais insuracne = $ 4,500

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