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25 April, 22:55

Fortune Company's direct materials budget shows the following cost of materials to be purchased for the coming three months: January February March $ 3 Material purchases 14,870 11,690 12,760 Payments for purchases are expected to be made 50% in the month of purchase and 50% in the month following purchase. The December Accounts Payable balance is $7,200. The budgeted cash payments for materials in January are

A. $13,580.

B. $13,815

C. $9,980

D. $7,200.

E. $19,960.

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  1. 26 April, 00:13
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    Total = $14,635

    Explanation:

    Giving the following information:

    Cost of materials:

    January = 14,870

    February = 11,690

    March = 12,760

    Payments for purchases are expected to be made 50% in the month of purchase and 50% in the month following purchase.

    The December Accounts Payable balance is $7,200.

    To calculate the cash disbursement for January, we need to use the following structure:

    Cash collection:

    Accounts Payable = 7,200

    Cash From January = (14,870*0.5) = 7,435

    Total = $14,635
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