Explanation Budgeting: Budgeting is a process to prepare the financial statement by the manager to estimate the organization’s future actions. It is also helpful to satisfy the everyday activities. The following table shows the schedule of cash payments for operations. Company E Schedule of Cash Payments for operations For the three months ending March 31 Details January ($) February ($) March ($) Payments of prior month’s expense 15,000 26,430 (1) 32,610 (2) Payments of current month’s expense 61,670 (3) 76,090 (4) 81,130 (5) Total Payments 76,670 102,520 113,740 Table (1) Working Notes: (1) Calculate the payments of prior month’s expense for February month. Total expenses = $91,600 Depreciation expense = $3,000 Insurance expense = $500 Paid percentage = 30% Payments of prior month's expense = ($91,600 − $ 3 , 000 − $ 500 ) × 30% = $ 26 , 430 (2) Calculate the payments of prior month’s expense for March month. Total expenses = $112,200 Depreciation expense = $3,000 Insurance expense = $500 Paid percentage = 30% Payments of prior month's expense = ($112,200 − $ 3 , 000 − $ 500 ) × 30% = $ 32 , 610 (3) Calculate the payments of current month’s expense for January month

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Author: Carl Warren, Ph.d. Cma William B. Tayler

Publisher: South-Western College Pub

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Chapter 8, Problem 20E

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Compute the schedule of cash payments for operations.

Solution Summary: The author explains budgeting as a process to prepare the financial statement by the manager to estimate the organization's future actions.

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Compute the schedule of cash payments for operations.

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