Green Mountain Financial Inc. was organized on February 28, 2014. Projected selling and administrative expenses

Green Mountain Financial Inc. was organized on February 28, 2014. Projected selling and administrative expenses for each of the first three months of operations are as follows:

March $45,800
April 56,900
May 71,000

Depreciation, insurance, and property taxes represent $8,000 of the estimated monthly expenses. The annual insurance premium was paid on February 28, and property taxes for the year will be paid in June. Sixty percent of the remainder of the expenses are expected to be paid in the month in which they are incurred, with the balance to be paid in the following month.

Prepare a schedule indicating cash payments for selling and administrative expenses for March, April, and May.


Answer:





















GREEN MOUNTAIN FINANCIAL INC.
Schedule of Cash Payments for Selling and Administrative Expenses
For the Three Months Ending May 31, 2014
March April May
March expenses: 1
Paid in March ($37,800 × 60%) $22,680
Paid in April ($37,800 × 40%) $15,120
April expenses: 2
Paid in April ($48,900 × 60%) 29,340
Paid in May ($48,900 × 40%) $19,560
May expenses: 3
Paid in May ($63,000 × 60%) 37,800
Total cash payments $22,680 $44,460 $57,360
1 $45,800 – $8,000 = $37,800
2 $56,900 – $8,000 = $48,900
3 $71,000 – $8,000 = $63,000
Note: Insurance, property taxes, and depreciation are expenses that do not result
in cash payments in March, April, or May.