Brunell Products has projected the following sales for the coming year: Q1 $540

Question

Brunell Products has projected the following sales for the coming year: Q1 $540 Q3 $780 04 $720 Sales $630 Sales in the year following this one are projected to be 25 percent greater in each quarter. Calculate payments to suppliers assuming that the company places orders during each quarter equal to 35 percent of projected sales for the next quarter. Assume that the company pays immediately a. What is the payables period in this case? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Payables period What are the payments to suppliers each quarter? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Q1 Q4 Payment of accounts b. Calculate payments to suppliers assuming that the company places orders during each quarter equal to 35 percent of projected sales for the next quarter. Assume a 90-day payables period. (Do not round intermediate calculations. Round your answers to 2 decimal places e.g., 32.16.) Q1 Q2 Q3 Q4 Payment of accounts c. Calculate payments to suppliers assuming that the company places orders during each quarter equal to 35 percent of projected sales for the next quarter. Assume a 60-day payables period. (Do not round intermediate calculations. Round your answers to 2 decimal places e.g., 32.16.) Q1 02 Q3 Q4 Payment of accounts

Explanation / Answer

Brunel Products a) Payable Period in this case is o because company pays immediately Payment to supplies each quarter Q1 Q2 Q3 Q4 Q1 Sales 540 630 780 720 540*1.25=675 Payment of Account=($630*35%) in Q1,($780*35%) in Q2,($720*35%) in Q3,($675*35%) in Q4 220.5 273 252 236.25 b) Q1 Q2 Q3 Q4 Q1 Sales $ 540.00 $ 630.00 $ 780.00 $ 720.00 $          675.00 Order of each Quarter=(35% Sales of next quarter)=($540*35%) in Q1,($630*35%) in Q2,($780*35%) in Q3,($720*35%) in Q4 $ 189.00 $ 220.50 $ 273.00 $ 252.00 Payment period =90 Days so Payment=35% of current sales of Quarter c) In each Quarter=90 Days Payment period =60 days so (60/90)=Payment=2/3 of the sales order of current quarter and (1/3) of next quarter order Q1 Q2 Q3 Q4 Q1 Sales $ 540.00 $ 630.00 $ 780.00 $ 720.00 $          675.00 ($540*35%)*2/3+($630*35%)*1/3 in Q1 $ 199.50 ($630*35%)*2/3+($780*35%)*1/3 in Q2 $ 238.00 ($780*35%)*2/3+($720*35%)*1/3 in Q3 $ 266.00 ($720*35%)*2/3+($675*35%)*1/3 in Q4 $          246.75

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