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Problem 4-21 Schedule of cash payments [LO4-2] The Denver Corporation has forecast the following sales for the first seven months of the year: January $

Problem 4-21 Schedule of cash payments [LO4-2]

The Denver Corporation has forecast the following sales for the first seven months of the year:

January $ 27,000 May $ 27,000
February 29,000 June 33,000
March 31,000 July 35,000
April 37,000

Monthly material purchases are set equal to 25 percent of forecast sales for the next month. Of the total material costs, 30 percent are paid in the month of purchase and 70 percent in the following month. Labor costs will run $5,700 per month, and fixed overhead is $10,500 per month. Interest payments on the debt will be $4,700 for both March and June. Finally, the Denver salesforce will receive a 1.50 percent commission on total sales for the first six months of the year, to be paid on June 30.

Prepare a monthly summary of cash payments for the six-month period from January through June. (Note: Compute prior December purchases to help get total material payments for January.)

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