Question

T

The Thakor Corporation’s purchases from suppliers in a quarter are equal to 75 percent of the next quarter’s forecasted sales. The payables period is 60 days. Wages, taxes, and other expenses are 20 percent of sales, and interest and dividends are $90 per quarter. No capital expenditures are planned.

Projected quarterly sales are:

		Q1			Q2			Q3			Q4
Sales		$	2,100		$	2,400		$	2,100		$	1,800

  

Sales for the first quarter of the following year are projected at $2,430. 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

Payment of accounts

$

$

$

$

Wages, taxes, other expenses

Long-term financing expenses (interest and dividends)

Total

$

$

$

$

Answer 1

	Q1		Q2		Q3		Q4
Payment of accounts	$	1425	$	1290	$	1410	$	1230
Wages, taxes, other expenses	$	420	$	480	$	420	$	360
Long-term financing expenses	$	90	$	90	$	90	$	90
(interest and dividends)
TOTAL		1935		1860		1920		1680

Explanation
Payments of Accounts	Q1	((2/3)*0.75*2430)+((1/3)*0.3*2100)
	Q2	((2/3)*0.75*2100)+((1/3)*0.3*2400)
	Q3	((2/3)*0.75*2400)+((1/3)*0.3*2100)
	Q4	((2/3)*0.75*2100)+((1/3)*0.3*1800)