In: Accounting
January budgeted selling and administrative expenses for the retail shoe store that Nadege Weib plans to open on January 1, 2014, are as follows: sales commissions, $28,000; rent, $14,500; utilities, $6,000; depreciation, $4,600; and miscellaneous, $1,800. Utilities are paid in the month after incurrence. Other expenses are expected to be paid in cash in the month in which they are incurred. |
Required |
a. |
Determine the amount of budgeted cash payments for January selling and administrative expenses. |
b. |
Determine the amount of utilities payable the store will report on the January 31st pro forma balance sheet. |
c. |
Determine the amount of depreciation expense the store will report on the income statement for the year 2014, assuming that monthly depreciation remains the same for the entire year. |
Requirement a
Answer------$44,300.
.
Requirement b
Answer---------$6,000
.
Requirement c
Answer--------$55,200
.
Working
January | |
Sales commission | $ 28,000.00 |
Rent | $ 14,500.00 |
Utilities | $ 6,000.00 |
Miscelanious | $ 1,800.00 |
Depreciation | $ 4,600.00 |
Total selling and administrative expenses | $ 54,900.00 |
Less: Non cash expense (depreciation) | $ 4,600.00 |
Total cash expense | $ 50,300.00 |
Less: Expense paid in next month (Utilities) | $ 6,000.00 |
Budgeted cash paid in January | $ 44,300.00 |
Depreciation for the year = 4600 x 12= $55,200