The budget director for Yardley 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.
Required
a. 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 $5,800 $ 5,800 $ 5,800
Salary expense 6,700 7,200 7,600
Cleaning supplies 2,880 2,720 3,040
Insurance expense 1,800 1,800 1,800
Depreciation on computer 2,400 2,400 2,400
Rent 2,100 2,100 2,100
Miscellaneous expenses 710 710 710
Total operating expenses $ 22,390 $ 22,730 $ 23,450
Schedule of Cash Payments for S&A Expenses
Equipment lease expense
Prior month's salary expense 100%
Cleaning supplies
Insurance premium
Depreciation on computer
Rent
Miscellaneous expenses
Total disbursements for operating expenses $ 22,290 $ 18,030 $ 18,850
b. Determine the amount of salaries payable the company will report on its pro forma balance sheet at the end of the fourth quarter.
Salaries payable
c. Determine the amount of prepaid insurance the company will report on its pro forma balance sheet at the end of the fourth quarter.