Question

The budget director for Stuart 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

1. Complete the schedule of cash payments for S&A expenses by filling in the missing amounts.

2. Determine the amount of salaries payable the company will report on its pro forma balance sheet at the end of the fourth quarter.

3. Determine the amount of prepaid insurance the company will report on its pro forma balance sheet at the end of the fourth quarter.

Complete the schedule of cash payments for S&A expenses by filling in the missing amounts.

October November December Budgeted S&A Expenses Equipment lease expense $5,200 $5,200 $5,200 Salary expense 6,900 7,400 7,800 Cleaning supplies 2,820 2,790 3,050 Insurance expense 1,800 1,800 1,800 Depreciation on computer 1,800 1,800 1,800 Rent 1,900 1,900 1,900 Miscellaneous expenses 760 760 760 Total operating expenses $21,180 $21,650 $22,310 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 Miscellaneous expenses Total disbursements for operating expenses $21,480 $17,550 $18,310

Determine the amount of salaries payable and prepaid insurance the company will report on its pro forma balance sheet at the end of the fourth quarter.

	b. Salaries payable c. Prepaid insurance

Answer 1

Above asked questions is about fill the missing schedule of cash payments for S&A expenses, and salaries payable & pre-paid insurance at the end of fourth quarter. Refer below images for more detailed solution.
Solution: payments for Sęt expenses: Schedule of Ca sh a) Particolars Equoipment lease expense oct Nov Dec $ 5200 $5200 $5200 $7400 $3050 prior month's Salavy expense, 1001. $ 6१०० cleaning Sopplies Insurance premium [6800 X6 months $10800 $ 2320 4२११० Rent $1900 $1900 $1900 Miscellaneous expenses $ 760 Tofal payments for SyA expern ses $21480 $ 760 $760 $17550 $18310 Note point: O Oepreciation is a cash Charge. non -

De termine the of amount Salaries paya ble the Com pany Will report pro-forma fourth quarter its on balance Sheet the at end of the Since Salavies is paid in the *pense it is incorred, month following the the amoont month end will be the December of payable at the incorred in December, of Salary expense amount .e, $ 780o . Detevmine of prepaid insurance, the the amount balance Sheet pro-forma forth aarter: Company report end will its on of the at the for 6 months insorance the * Since premium is prepaid of prepaid be $ 5400 · october 1, the Insorance amount on end of Decem ber will the at ire, $ 10800-C$1800X3) = $ 5400 %3D