Question

A company pays all selling expenses in the month incurred. Budget information includes: Administrative salaries: $50,000; Sales commissions: $20,000; Advertising: $10,000; Depreciation on store equipment: $25,000; Rent on administrative building: $30,000; Miscellaneous administrative expenses: $5,000. Total cash disbursements for administrative expenses is

Answer 1

The Total cash disbursements for administrative expenses is $85,000

Step-by-step explanation:

For computing the Total cash disbursements for administrative expenses, following equation should be used which is shown below:

= Administrative salaries + Rent on Administrative building + Miscellaneous administrative expenses

= $50,000 + $30,000 + $5,000

= $85,000

The other cost like sales commission, depreciation on store equipment is not been considered in the computation part because it is not related to the administrative expense. Hence, these cost would not be recognized.

Hence, the Total cash disbursements for administrative expenses is $85,000