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 20 percent greater in each quarter. Requirement 1: Calculate payments to suppliers assuming that the company places orders during each quarter equal to 20 percent of projected sales for the next quarter. Assume that the company pays immediately. (a) What is the payables period in this case? (b) What are the payments to suppliers each quarter? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16)): Requirement 2: Calculate payments to suppliers assuming that the company places orders during each quarter equal to 20 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).) Requirement 3: Calculate payments to suppliers assuming that the company places orders during each quarter equal to 20 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

Statement showing computations Particulars Q4 PY Q1 Q2 Q3 Q4 Q1 NY Sales Budget 330 420 570 510 396 Purchases @30% 66 84 114 102 79.2                                   -   a)Payment in Same Quarter 84 114 102 79.2                                   -   b) Payment in 90 Days 66 84 114 102 79.2 c) Payment in 60 Days 84 114 102 79.2                                   -   Note: Assumed Purchases are done at the beginning of quarter

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