The budget director for Kanosh 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 Complete the schedule of cash payments for S&A expenses by filling in the missing amounts.
Determine the amount of salaries payable the company will report on its pro forma balance sheet at the end of the fourth quarter.
Determine the amount of prepaid insurance the company will report on its pro forma balance sheet at the end of the fourth quarter.
October November December
Budgeted S&A Expenses
Equipment lease expense $7,500 $7,500 $7,500
Salary expense 8,200 8,700 9,000
Cleaning supplies 2,800 2,730 3,066
Insurance expense 1,200 1,200 1,200
Depreciation on computer 1,800 1,800 1,800
Rent 1,700 1,700 1,700
Miscellaneous expenses 700 700 700
Total operating expenses $23,900 $24,330 $24,966
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 $19,900 $20,830 $21,666
b. Salaries payable
c. Prepaid insurance