The Following Details Have Been Extracted from the Budget of a Merchandising

question 151

Multiple Choice

The following details have been extracted from the budget of a merchandising company. $$\begin{array} { | l | l | } \hline \text { Rent Expense } & \$ 8800 \text { per month } \\\hline \text { Depreciation Expense } & \$ 3500 \text { per month } \\\hline \text { Insurance Expense } & \$ 1250 \text { per month } \\\hline \text { Miscellaneous Expense } & 4 \% \text { of sales, paid as incurred } \\\hline \text { Commissions Expense } & 10 \% \text { of sales } \\\hline \text { Salaries Expense } & \$ 8000 \text { per month } \\\hline\end{array}$$ $$\begin{array} { | c | l | l | l | } \hline \text { Dec } & \text { Jan } & \text { Feb } & \text { March } \\\hline \text { Sales } \$ 65,000 & \$ 70,000 & \$ 85,000 & \$ 100,000 \\\hline\end{array}$$ Commissions and salaries expenses are paid 50% in the month to which they are incurred and the balance in the next month.
Rent and miscellaneous expenses are paid as and when they occur. Insurance is prepaid at the beginning of the quarter. Calculate cash payments for the selling and administrative expenses for the first quarter of the next year.

• A) $33,950
• B) $54,150
• C) $88,100
• D) $30,100

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Definitions:

Exports

Products or services transferred from one nation to another for the purpose of sale or exchange.

Debit

An accounting entry that results in either an increase in assets or a decrease in liabilities on a company's balance sheet.

Balance of Payments

A comprehensive record of a country's financial transactions with the rest of the world over a specific time period, including exports and imports of goods and services, financial transfers, and investments.

Oxfam America

A branch of the international confederation Oxfam, focused on addressing poverty, hunger, and injustice through advocacy and humanitarian efforts.