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 $34,100. The budgeted expenses for the next three months are as follows:

	January		February		March
Salaries	$78,400		$95,500		$105,700
Utilities	6,500		7,200		8,500
Other operating expenses	60,400		65,800		72,500
Total	$145,300		$168,500		$186,700

Other operating expenses include $4,300 of monthly depreciation expense and $1,000 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
Salaries	$	$	$
Utilities
Total cash payments	$	$	$

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Calculate cash payments in January, February, and March.

Answer 1

Solution

EastGate Physical Therapy inc
Schedule of cash payments for operations
For the month ending Mar 31
	January	February	March
Payment of prior month's expense	$    34,100.00	$    49,000.00	$    57,120.00
Payment of Current month's expense	$    91,000.00	$ 106,080.00	$ 117,910.00
Total cash Payments	$ 125,100.00	$ 155,080.00	$ 175,030.00

Working
	January	February	March
Total Operating Expenses	$ 145,300.00	$ 168,500.00	$ 186,700.00
Less Depreciation	$      4,300.00	$      4,300.00	$      4,300.00
Less: Prepaid insurance expense	$      1,000.00	$      1,000.00	$      1,000.00
Net cash expenses	$ 140,000.00	$ 163,200.00	$ 181,400.00
Paid in current month in %	65%	65%	65%
Paid in current month	$    91,000.00	$ 106,080.00	$ 117,910.00
Paid next month	$    49,000.00	$    57,120.00	$    63,490.00