Grohl Products has projected the following sales for the coming year: Sales in t

Question

Grohl Products has projected the following sales for the coming year: 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. What is the payables period in this case? What are the payments to suppliers each quarter? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16)): 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).) 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).)

Explanation / Answer

Quarter Q1 Q2 Q3 Q4 Q1 nest Year Sales 480 570 720 660 528 1 a When payment term is immediate , The Payable period = 0 b When payment is immediate , the payment in each qtr will be = 25% of sales of next qtr Q1 Q2 Q3 Q4 Payment of Accounts $ 142.5 180 165 132 2 when payable period =90 days , then payment each qtr will be        = 25% of current qtr sale Q1 Q2 Q3 Q4 Payment of Accounts $ 120 142.5 180 165 3 When payable periods =60 days , then payment in each qtr will be =2/3*25% of current qtr sales +1/3*25% of next qtr sales Q1 Q2 Q3 Q4 Payment of Accounts $ 127.5 155 175 154

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