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27 July, 11:47

Fortune Company's direct materials budget shows the following cost of materials to be purchased for the coming three months:

January February March

Material purchases $12,040 $14,150 $10,970

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 $6,500. The budgeted cash payments for materials in January are:

a. $18,540.

b. $13,095.

c. $6,500.

d. $9,270.

e. $12,520.

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  1. 27 July, 11:53
    0
    e. $12,520.

    Explanation:

    January Material purchases $12,040

    Payments 50% of $12,040 = 6020

    December Accounts Payable balance is $6,500

    Cash payments for materials in January

    $6020+6500=$12,520
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