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Horizon Financial Inc. was organized on February 28. Projected selling and administrative expenses for each of the first three months of operations are as follows: March April MayExpenses $125,800 $117,000 $106,500Depreciation, insurance, and property taxes represent $27,000 of the estimated monthly expenses. The annual insurance premium was paid on February 28, and property taxes for the year will be paid in June, 65% of the remainder of the expenses are expected to be paid in the month in which they are incurred, with the balance to be paid in the following month.Prepare a schedule of cash payments for selling and administrative expenses for March, April, and May.

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Answer:

Depreciation, insurance, and property taxes represent $27,000 of the estimated monthly expenses so will have to be removed to find out how much is due in the month.

                                                                          March           April           May

March Expenses :  

Paid in March                                                   $73,112

Paid in April                                                                          $25,688

April Expenses :  

Paid in April                                                                     $66, 600

Paid in May                                                                                            $23,400

May Expenses :  

Paid in May                                                                                            $‭58,830‬

Total Cash Payment                                        $73,112      $92,288   $82,230

Working

March Expenses

Paid in March ((125,800 - 27,000)* 74%) = $73,112

Paid in April ((125,800 - 27,000)*26%) = $25,688.

April Expenses

Paid in April ((117,000 - 27,000)*74%) =  $66, 600

Paid in May ((117,000 - 27,000)*26%) = $23,400

May Expenses

Paid in May ((106,500 - 27,000)*74%) = $‭58,830‬

"The Total Cash Payment of March, April, and May $73,112; $92,288 and $82,230 To understand the calculations, check below"                              

Calculation of Depreciation, insurance, and property taxes

Computation of Depreciation, insurance, and also property taxes represent $27,000 of the estimated monthly expenditures so will have to be withdrawn to find out how much is due in the month.

                                                                         March           April           May

March Expenses:  

Paid in March                                                   $73,112

Paid in April                                                                          $25,688

April Expenses:  

Paid in April                                                                     $66, 600

Paid in May                                                                                         $23,400

May Expenses:  

Paid in May                                                                                         $‭58,830‬

Total Cash Payment                                        $73,112     $92,288  $82,230

Working Note:

March Expenses are:

Paid in March ((125,800 - 27,000)* 74%) is = $73,112

Paid in April ((125,800 - 27,000)*26%) is = $25,688.

April Expenses are:

Paid in April ((117,000 - 27,000)*74%) is = $66, 600

Paid in May ((117,000 - 27,000)*26%) is = $23,400

May Expenses are:

Then Paid in May ((106,500 - 27,000)*74%) is = $‭58,830‬

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