Rowen Company pays 80% of its expenses in the month incurred.Rowen's controller has developed the following budgeted amounts budgeted for selling and administrative expenses for July: What amount will Rowen report on its July pro-forma income statement for selling and administrative expenses?

Question

Rowen Company pays 80% of its expenses in the month incurred.Rowen's controller has developed the following budgeted amounts budgeted for selling and administrative expenses for July:  What amount will Rowen report on its July pro-forma income statement for selling and administrative expenses?

Quizplus · Accepted Answer

Selling and administrative expenses budgeted for July = $74,875 
80% of budgeted expenses = $59,900 (as the question states that Rowen Company pays 80% of expenses in the month incurred) 
Therefore, the amount Rowen will report on its July pro-forma income statement for selling and administrative expenses is $59,900.

Rowen Company Pays 80% of Its Expenses in the Month