Schedule of Cash Payments for a Service Company EastGate Physical Therapy Inc. is planning its cash payments for operations for the first quarter (January- March). The Accrued Expenses Payable balance on January 1 is $34,300. The budgeted expenses for the next three months are as follows: January February March Salaries $78,900 $96,000 $106,300 Utilities 6,500 7,200 8,600 Other operating expenses 60,000 65,400 72,000 Total $145,400 $168,600 $186,900 Other operating expenses include $4,300 of monthly depreciation expense and $1,000 of monthly insurance expense that was prepaid for the year on May 1 of the previous year. Of the remaining expenses, 75% are aid in the month in which they are incurred, with the remainder paid in the following month. The Accrued Expenses Payable balance on January 1 relates to the expenses incurred in December. Prepare a schedule of cash payments for operations for January, February, and March. Enter all amounts as positive numbers. EastGate Physical Therapy Inc. Schedule of Cash Payments for Operations For the Three Months Ending March 31 January February March Payments of prior month's expense 34,300 42,030 X $ 48,990X Payments of current month's expense 98,070 X 114,310 x 127,120 X EastGate Physical Therapy Inc. Schedule of Cash Payments for Operations For the Three Months Ending March 31 January February Payments of prior month's expense 34,300 42,030 X ayments of current month's expense 98,070 X 114,310 X March $ 48,990 X 127,120 X Total cash payments 132,370 X 156,340 X 176,110 x Feedback Check My Work Calculate cash payments in January, February, and March Learning Objective 5. Differential Analysis for a Lease or Buy Decision Sloan Corporation is considering new equipment. The equipment can be purchased from an overseas supplier for $3,180. The freight and installation costs for the equipment are $650. If purchased, annual repairs and maintenance are estimated to be $420 per year over the four-year useful life of the equipment. Alternatively, Sloan can lease the equipment from a domestic supplier for $1,400 per year for four years, with no additional costs. Prepare a differential analysis dated December 3, to determine whether Sloan should lease (Alternative 1) or purchase (Alternative 2) the machine. (Hint: This is a "lease or buy" decision, which must be analyzed from the perspective of the machine user, as opposed to the machine owner.) If an amount is zero, enter "0". Use a minus sign to indicate a loss. Differential Analysis Lease Equipment (Alt. 1) or Buy Equipment (Alt. 2) December 3 Lease Equipment Buy Equipment Differential Effect on Income (Alternative 1) (Alternative 2) (Alternative 2) Revenues Costs: Purchase price 3,180 Freight and installation 650 -650 Repair and 1,680 - 1,680 maintenance (4 years) Lease (4 years) 5,600 -3,180 986 5,600 Income (loss) -5,600 -5,510 90