Question

The Thakor Corporation’s purchases from suppliers in a quarter are equal to 60 percent of the next quarter’s forecasted sales. The payables period is 60 days. Wages, taxes, and other expenses are 25 percent of sales, and interest and dividends are $85 per quarter. No capital expenditures are planned.

Projected quarterly sales are:

		Q1			Q2			Q3			Q4
Sales		$	2,070		$	2,370		$	2,070		$	1,770

  

Sales for the first quarter of the following year are projected at $2,400. 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

Statement Showing Cash Outlays
Particulars	Q1			Q2			Q3			Q4
	$		Calculation	$		Calculation	$		Calculation	$		Calculation
Payment of accounts		1302	(2070*60%*2/3) + (2370*60%*1/3)		1362	(2370*60%*2/3) + (2070*60%*1/3)		1182	(2070*60%*2/3) + (1770*60%*1/3)		1188	(1770*60%*2/3) + (2400*60%*1/3)
Wages, Taxes, other expenses		517.5	2070*25%		592.5	2370*25%		517.5	2070*25%		442.5	1770*25%
Long Term Financing Expenses (Interest and Dividends)		85	Given		85	Given		85	Given		85	Given
Total		1905			2040			1785			1716

*** Here Payable period is 60 days i.e., 2/3rd period of a quarter.we have to pay 2/3rd of last quarter purchases and 1/3rd of current quarter purchases.