Brunell Products has projected the following sales for the coming year: Q1 Q2 Q3

Question

Brunell Products has projected the following sales for the coming year: Q1 Q2 Q3 Q4 Sales $480 $570 $720 $660 Sales in the year following this one are projected to be 10 percent greater in each quarter. Calculate payments to suppliers assuming that the company places orders during each quarter equal to 25 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 Q2 Q3 Q4 Payment of accounts $ $ $ $ b. Calculate payments to suppliers assuming that the company places orders during each quarter equal to 25 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 25 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 Q2 Q3 Q4 Payment of accounts $ $ $ $

Explanation / Answer

Particulars Q1 Q2 Q3 Q4 Total Q1(Next Year) Sales $480.00 $570.00 $720.00 $660.00 $2,430.00 $528.00 a Payment to Suppliers (25% of Sales of Next Quarter) $142.50 $180.00 $165.00 $132.00 $619.50 The Sales of Q1 of next year is calculated as : $480+($480*10%) Payable Period will be zero as it paid immediately b Payment to Suppliers ( As the Payment period is 90 days it will be 25% of Current Quarter) $120.00 $142.50 $180.00 $165.00 $607.50 c Payment to Suppliers ( As the Payment period is 60 days it will be 2/3rd of (25% Current Quarter Sales) Plus 1/3rd of (25% Next Quarter Sales) $127.5 $155 $175 $154 $611.50 Q1= ($480*.25*2/3)+($570*.25*1/3) Q2= ($570*.25*2/3)+($720*.25*1/3) Q1= ($720*.25*2/3)+($660*.25*1/3) Q1= ($660*.25*2/3)+($528*.25*1/3)

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