Question

The budget director for Campbell 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.

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 5,300 5,800 6,200 Cleaning supplies 2,830 2,720 3,030 Insurance expense 1,500 1,500 1,500 Depreciation on computer 2,000 2,000 2,000 Rent 2,000 2,000 2,000 Miscellaneous expenses 650 650 650 Total operating expenses $19,480 $19,870 $20,580 Schedule of Cash Payments for S&A Expenses Equipment lease expense $5,200 $5,200 $5,200 Prior month’s salary expense, 100% Cleaning supplies 2,830 2,720 3,030 Insurance premium Depreciation on computer Rent 2,000 2,000 2,000 Miscellaneous expenses 650 650 650 Total disbursements for operating expenses $19,680 $15,870 $16,680

• 
  b.Salaries payable
• c.Prepaid insurance

Answer 1

	October	November	December
Budgeted S&A Expenses
Equipment lease expense	5200	5200	5200
Salary expense	5300	5800	6200
Cleaning supplies	2830	2720	3030
Insurance expense	1500	1500	1500
Depreciation on computer	2000	2000	2000
Rent	2000	2000	2000
Miscellaneous expenses	650	650	650
Total operating expenses	19480	19870	20580
Schedule of Cash Payments for S&A Expenses
Equipment lease expense	5200	5200	5200
Prior month’s salary expense, 100%	0	5300	5800
Cleaning supplies	2830	2720	3030
Insurance premium	9000	0	0
Depreciation on computer	0	0	0
Rent	2000	2000	2000
Miscellaneous expenses	650	650	650
Total disbursements for operating expenses	19680	15870	16680
b    Salaries payable	6200
c.   Prepaid insurance	4500	=1500*3