Question

Schedule of Cash Payments

Select Physical Therapy Inc. is planning its cash payments for operations for the third quarter (July–September), 2017. The Accrued Expenses Payable balance on July 1 is $28,700. The budgeted expenses for the next three months are as follows:

	July		August		September
Salaries	$66,000		$80,400		$89,000
Utilities	5,500		6,000		7,200
Other operating expenses	50,200		54,700		60,200
Total	$121,700		$141,100		$156,400

Other operating expenses include $3,600 of monthly depreciation expense and $800 of monthly insurance expense that was prepaid for the year on March 1 of the current year. Of the remaining expenses, 75% are paid in the month in which they are incurred, with the remainder paid in the following month. The Accrued Expenses Payable balance on July 1 relates to the expenses incurred in June.

Prepare a schedule of cash payments for operations for July, August, and September.

Select Physical Therapy Inc.
Schedule of Cash Payments for Operations
For the Three Months Ending September 30, 2017
	July	August	September
Payments of prior month's expense	$	$	$
Payments of current month's expense
Total payment	$	$	$

Answer 1

Select Physical Therapy Inc
Schedule of Cash Payments for Operations
For the Three Months Ending September 30, 2017
Details	July	August	September
Payments of prior month's expense	$        28,700	$        29,325	$        34,175
Payments of current month's expense	$        87,975	$      102,525	$      114,000
Total payment	$      116,675	$      131,850	$      148,175
Working Notes :
Calculate the payments of prior month's expenses for August Month
Total Expenses = $ 121700
Depreciation Expenses = $ 3600
Insurance expenses = $ 800
Payments of Prior Month's Expense = ($ 121,700- $ 3,600 - $ 800) x 25%
= $ 29,325
Payments of current month's expense = ( $ 141,100 - $ 34,175 - $ 3,600 - $ 800)
= $ 102,525
Calculate the payments of prior month's expenses for September Month
Total Expenses = $ 141,100
Depreciation Expenses = $ 3600
Insurance expenses = $ 800
Payments of Prior Month's Expense = ($ 141,100 - $ 3,600 - $ 800) x 25%
= $ 34,175
Payments of current month's expense = ( $ 156,400 - $ 38,000 - $ 3,600 - $ 800)
= $ 114,000
Payments of January expense = ( $ 121,700 - $ 29,325 - $ 3,600 - $ 800)
= $ 87975