Sedman, Corp., has projected the following sales for the coming year: Sales in t
ID: 2764719 • Letter: S
Question
Sedman, Corp., has projected the following sales for the coming year:
Sales in the year following this one are projected to be 20 percent greater in each quarter.
Calculate payments to suppliers assuming that the company places orders during each quarter equal to 30 percent of projected sales for the next quarter. Assume that the company pays immediately. (Round your answers to 2 decimal places, e.g., 32.16.)
Calculate payments to suppliers assuming a 90-day payables period. (Round your answers to 2 decimal places, e.g., 32.16.)
Calculate payments to suppliers assuming a 60-day payables period. (Round your answers to 2 decimal places, e.g., 32.16.)
Q1 Q2 Q3 Q4 Sales $ 940 $ 1,020 $ 980 $ 1,080Explanation / Answer
a.
The payables period is zero since Toby pays immediately. Payment in each period = 0.30 times next period sales.
Q1
Q2
Q3
Q4
Sales for next quarter
$1,020
$980
$1,080
$1,128
Payment of accounts
$306.00
$294.00
$324.00
$338.40
b.
Since the payables period is 90 days, payment in each period = 0.3 times current period sales.
Q1
Q2
Q3
Q4
Sales for current quarter
$940.00
$1,020.00
$980.00
$1,080.00
Payment of accounts
$282.00
$306.00
$294.00
$324.00
c.
Since the payables period is 60 days, payment in each period = 2/3 of last quarter’s orders, and 1/3 of this quarter’s orders, or 2/3(.30) times current sales + 1/3(.30) next period sales.
Q1
Q2
Q3
Q4
Sales for current quarter
$940.00
$1,020.00
$980.00
$1,080.00
Sales for next quarter
$1,020.00
$980.00
$1,080.00
$1,128.00
Payment of accounts
- 2/3 * 30% * Current quarter sales
$188
$204
$196
$216
- 1/3 * 30% * Next quarter sales
$102
$98
$108
$113
$290
$302
$304
$329
Q1
Q2
Q3
Q4
Sales for next quarter
$1,020
$980
$1,080
$1,128
Payment of accounts
$306.00
$294.00
$324.00
$338.40
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