Q27E
Question
Preparing a financial budget—schedule of cash payments
Marcel Company has the following projected costs for manufacturing and selling and administrative expenses:
January February March Direct materials purchases \( 3,100 \) 3,500 $ 4,800 Direct labor costs 3,300 3,500 3,600 Depreciation on plant 550 550 550 Utilities for plant 650 650 650 Property taxes on plant 200 200 200 Depreciation on office 550 550 550 Utilities for office 250 250 250 Property taxes on office 170 170 170 Office salaries 3,500 3,500 3,500
All costs are paid in month incurred except: direct materials, which are paid in the month following the purchase; utilities, which are paid in the month after incurred; and property taxes, which are prepaid for the year on January 2. The Accounts Payable and Utilities Payable accounts have a zero balance on January 1. Prepare a schedule of cash payments for Marcel for January, February, and March. Determine the balances in Prepaid Property Taxes, Accounts Payable, and Utilities Payable as of March 31.
Step-by-Step Solution
VerifiedAnswer
The balances in prepaid property taxes, accounts payable, and utilities payable are $3,330, $4,800, $ 900.
Particulars | January | February | March |
Total budgeted merchandise inventory | $3,100 | $3,500 | $4,800 |
Cash payments: | |||
Direct materials | $0 | $3,100 | $3,500 |
Direct labor cost | $3,300 | $3,500 | $3,600 |
Utilities for plant | $0 | $650 | $650 |
Property taxes on plant | $200*12 =$2,400 | - | - |
Utilities for office | $0 | $250 | $250 |
Property taxes on office | $170*12 =$2,040 | - | - |
Office salaries | $3,500 | $3,500 | $3,500 |
Total cash payments | $14,340 | $14,500 | $16,300 |
Prepaid property taxes = (tax on office+ tax on plant)*9
= ($200+$170)*9
= $3,330
Accounts payable =4,800
Utilities payable = Utilities on office+ utilities on plant
= $650 + $250
= $900