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    Summary of Cash Payments

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    The Liston Inc. has forecast the following sales for the first seven months of the year:

    January $10,000 May $10,000
    February 12,000 June 16,000
    March 14,000
    April 20,000 July 18,000

    Monthly material purchases are set equal to 30 percent of forecasted sales for the next month. Of the total material costs, 40 percent are paid in the month of purchase and 60 percent in the following month. Labor costs will run $4,000 per month, and fixed overhead is $2,000 per month. Interest payments on the debt will be $3,000 for both March and June. Finally, the Liston sales force will receive a 1.5 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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    Solution Summary

    The solution provides the monthly summary of cash payments for Liston Inc