The Bruin Corporation’s purchases from suppliers in a quarter are equal to 75 pe

Question

The Bruin Corporation’s purchases from suppliers in a quarter are equal to 75 percent of the next quarter’s forecast sales. The payables period is 60 days. Wages, taxes, and other expenses are 30 percent of sales, and interest and dividends are $125 per quarter. No capital expenditures are planned. Projected quarterly sales are:

The Bruin Corporation’s purchases from suppliers in a quarter are equal to 75 percent of the next quarter’s forecast sales. The payables period is 60 days. Wages, taxes, and other expenses are 30 percent of sales, and interest and dividends are $125 per quarter. No capital expenditures are planned. Projected quarterly sales are:

Explanation / Answer

Q1 Q2 Q3 Q4 Next year Q1   Sales [a]     1,200.00         1,350.00    1,440.00             1,650.00           1,320.00 Purchases [b = next quarter sale*75%]     1,012.50         1,080.00    1,237.50                 990.00 Beginning Accounts Payable [c ]         600.00             675.00       720.00                 825.00 Ending Accounts Payable [d = b*60/90]         675.00             720.00       825.00                 660.00 Cash Paid for Purchases [e = b+c-d]         937.50         1,035.00    1,132.50             1,155.00 Wages, taxes, and other expenses [f = a*30%]         360.00             405.00       432.00                 495.00 interest and dividends [g]         125.00             125.00       125.00                 125.00 Total Cash Outlay [h = e+f+g]     1,422.50         1,565.00    1,689.50             1,775.00

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