Reference no: EM132013181
Problem -
1. Sales representatives' commissions are 10% of sales and are paid in the month of the sales. The sales manager's monthly salary is $3,100.
2. Monthly general and administrative expenses include $13,000 administrative salaries and 0.5% monthly interest on the long-term note payable.
3. The company expects 20% of sales to be for cash and the remaining 80% on credit. Receivables are collected in full in the month following the sale (none are collected in the month of the sale).
4. All raw materials purchases are on credit, and no payables arise from any other transactions. One month's raw materials purchases are fully paid in the next month.
ZIGBY MANUFACTURING
General and Administrative Expense Budgets
April, May, and June 2017
April May June Total
Salaries $13,000 $13,000 $13,000 $39,000
Interest on long-term note $2,525 $2,525 $2,525 $7,575
Total budgeted G&A expenses $15,525 $15,525 $15,525 $15,525
How was the Interest on long-term note calculated from the $13,000?