Question 5 (of 7) value: 9.00 points January budgeted selling and administrative

Question

Question 5 (of 7) value: 9.00 points January budgeted selling and administrative expenses for the retail shoe store that Nadege Weib plans to open on January 1, 2014, are as follows: sales commissions, $24,000; rent, $17,500; utilities, $4,900; depreciation, $4,500; and miscellaneous, $1,400. Utilities are paid in the month after incurrence. Other expenses are expected to be paid in cash in the month in which they are incurred. Required a. Determine the amount of budgeted cash payments for January selling and administrative expenses. Budgeted cash payments b. Determine the amount of utilities payable the store will report on the January 31st pro forma balance sheet Utilities payable c. Determine the amount of depreciation expense the store will report on the income statement for the year 2014, assuming that monthly depreciation remains the same for the entire year. Depreciation expense

Explanation / Answer

Answer a

Utilities are not included as these are paid in the month after the incurrence, hence not payable in January and depreciation is a non cash expenditure

Answer b

Utilities payable reported on January 31st proforma balance sheet will be $4,900 as the entire is oustanding and will be paid in the next month

Answer c

Depreciation reported in Jan is $4,500. Since it is expected to remain the same for the entire year, depreciation to be reported in income statement for the year will be $4,500 x 12 = $54,000

Budgeted Cash Payments Sales commissions 24000 Rent 17500 Miscellaneous 1400 42900

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