Question

Schedule of Cash Payments for a Service Company

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 $25,600. The budgeted expenses for the next three months are as follows:

	January		February		March
Salaries	$58,900		$71,700		$79,400
Utilities	4,900		5,400		6,400
Other operating expenses	45,400		49,500		54,500
Total	$109,200		$126,600		$140,300

Other operating expenses include $3,200 of monthly depreciation expense and $700 of monthly insurance expense that was prepaid for the year on May 1 of the previous year. Of the remaining expenses, 65% 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.

EastGate Physical Therapy Inc.
Schedule of Cash Payments for Operations
For the Three Months Ending March 31
	January	February	March
Payments of prior month's expense	$	$	$
Payments of current month's expense
Total cash payments	$	$	$

Answer 1

EastGate Physical Therapy Inc.
Schedule of Cash Payments for Operations
For the Three Months Ending March 31
	January	February	March
Payments of prior month's expense	25,600	36,855	42,945
Payments of current month's expense	68,445	79,755	88,660
Total cash payments	94,045	116,610	131,605
Note: Depreciation is a non cash expense and hence not paid

C 1 EastGate Physical Therapy Inc Schedule of Cash Payments for Operations 2 3 For the Three Months Ending March 31 February (109200-3200-700)*35% =(126600-3200-700)*35% January 25600 March 4 5 Payments of prior month's expense 6 Payments of current month's expense 7 Total cash payments (109200-3200-700)*65% (126600-3200-700)*65% (140300-3200-700)*65% |=SUM(B5:B6) -SUM(C5:C6) -SUM(D5:D6) 9 Note: Depreciation is a non cash expense and hence not paid