Elkins Feed Mill has the following estimated sales: Sales April - 6700 May - 590

Question

Elkins Feed Mill has the following estimated sales:  

Sales
April - 6700 May - 5900 June - 5400 July - 5800   

Purchases are equal to 65 percent of the followingquarter's sales. The accounts receivable period is 30 days and theaccounts payable period is 60 days. Assume there are 30 days ineach month. The firm will purchase _____ of goods in quarter twoand pay its suppliers _____ during quarter three.
a. $3,510 / $4,355 b. $4,355 / $3,510 c. $3,510 / $3,597 d. $3,770 / $3,597 e. $3,770 / $4,355 Sales
April - 6700 May - 5900 June - 5400 July - 5800   

Purchases are equal to 65 percent of the followingquarter's sales. The accounts receivable period is 30 days and theaccounts payable period is 60 days. Assume there are 30 days ineach month. The firm will purchase _____ of goods in quarter twoand pay its suppliers _____ during quarter three.
a. $3,510 / $4,355 b. $4,355 / $3,510 c. $3,510 / $3,597 d. $3,770 / $3,597 e. $3,770 / $4,355

Explanation / Answer

Purchase of Q2 = 0.65*July Sales = 0.65*5800 =3770 A/P of Q3 = 0.65* Sales April = 0.65*6700 = 4355

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