The Sepulcro Corporation’s purchases from suppliers in a quarter are equal to 70

Question

The Sepulcro Corporation’s purchases from suppliers in a quarter are equal to 70 percent of the next quarter’s forecast sales. The payables period is 60 days. Wages, taxes, and other expenses are 25 percent of sales, and interest and dividends are $117 per quarter. No capital expenditures are planned. Projected quarterly sales are:
  

  
Sales for the first quarter of the following year are projected at $1,710.
  
Calculate the company’s cash outlays by completing the following: (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Q1 Q2 Q3 Q4 Sales $1,590 $1,740 $1,800 $2,040 The sepulcro Corporation's purchases trom suppliens in a quarter are equal to 70 percent of the next quarter's torecast sales. The payables penod is 60 days. Wages, taxes, and other expenses are 25 percent of sales, and interest and dividends are 5117 per quaner. No ca are planed. Projecled quarlerly sales are 03 01 150 10 $1,800 04 $2n40 Salas Sales for the first quarter of the following ycar are projccted at S1,710. Calculate the company's cash outlays by completing the following: (Do not round Intermediate calculations and round your answers to 2 decimal places, e.g. 32.18.) ce cid Payment of accounts Wages, taxas, otherxsas Long term financing cxpenses finteres and dividends) Total

Explanation / Answer

By assuming that the purchase is made at the Beginning of a quarter, the Payment of next quarter will be calculated in this quarter as payable days is only 60 days.

Formula for Calculating Payment Expense Q1 = 70%* Sales of Q2

Formula for calculating Wages, taxes, other expenses = 25%*Sales of Q1

  

Particulars Quarter 1 Quarter 2 Quarter 3 Quarter 4 Payment of Accounts 0.70*1740=1218 0.70*1800=1260 0.70*2040=1428 0.70*1710 =1197 Wages, Taxes, Other expenses 25% on 1590 =397.5 25%on 1740=435 25% on 1800 = 450 25% on 2040 =510 Long Term FInancing Expenses 117 117 117 117 Total 1732.5 1812 1995 1824

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