The Torrey Pine Corporation\'s purchases from suppliers in a quarter are equal t
ID: 2764654 • Letter: T
Question
The Torrey Pine Corporation's purchases from suppliers in a quarter are equal to 70 percent of the next quarter's forecast 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 shown here: Sales for the first quarter of the following year are projected at $2,220. Calculate the company's cash outlays by completing the following (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g.. 32.16.):Explanation / Answer
Since the payables period is 60 days, the payables in each period will be:
Payables each period = 2/3 of last quarter’s orders + 1/3 of this quarter’s orders
Payables each period = 2/3(.70) times current sales + 1/3(.70) next period sales
Q1
Q2
Q3
Q4
Payment of accounts
(2/3 * 70% * Current sales)
$882.00
$1,022.00
$882.00
$742.00
(1/3 * 70% * Next quarter sales)
$511.00
$441.00
$371.00
$518.00
Wages, taxes, other expenses
$378.00
$438.00
$378.00
$318.00
Long-term financing expenses
(Interest and Dividends)
$90.00
$90.00
$90.00
$90.00
Total
$1,861.00
$1,991.00
$1,721.00
$1,668.00
Q1
Q2
Q3
Q4
Payment of accounts
(2/3 * 70% * Current sales)
$882.00
$1,022.00
$882.00
$742.00
(1/3 * 70% * Next quarter sales)
$511.00
$441.00
$371.00
$518.00
Wages, taxes, other expenses
$378.00
$438.00
$378.00
$318.00
Long-term financing expenses
(Interest and Dividends)
$90.00
$90.00
$90.00
$90.00
Total
$1,861.00
$1,991.00
$1,721.00
$1,668.00
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