The Torrey Pine Corporation’s purchases from suppliers in a quarter are equal to
ID: 2764720 • 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 $2,670. 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.):
Projected quarterly sales are shown here:
Explanation / Answer
Torrey Pine Corporation’s purchases from suppliers during a quarter are equal to 70% of next quarter’s forecast sales. Torrey Pine Corporation’s payments to suppliers are 60 days credit period, which implies that (90-60)/90 = 33.33333% of the purchases will be paid during the current quarter and balance 66.66667% during the following quarter. In the most recent quarter, Torrey Pine Corporation’s purchases are ($2,340 X70%) X 66.67% = $1,092.00; which will be paid during the first quarter.
Q1
Q2
Q3
Q4
Beginning Payable
$ 1,092.00
$ 1,232.00
$ 1,092.00
$ 952.00
Sales
$ 2,340.00
$ 2,640.00
$ 2,340.00
$ 2,040.00
Purchases @70% of next Qtr.
$ 1,848.00
$ 1,638.00
$ 1,428.00
$ 1,869.00
Cash Payable @33.33%
$ 616.00
$ 546.00
$ 476.00
$ 623.00
Payment of accounts
$ 1,708.00
$ 1,778.00
$ 1,568.00
$ 1,575.00
Ending Payable @ 66.67%
$ 1,232.00
$ 1,092.00
$ 952.00
$ 1,246.00
The Cash outflows are:
Q1
Q2
Q3
Q4
Sales
$ 2,340.00
$ 2,640.00
$ 2,340.00
$ 2,040.00
Payment of accounts
$ 1,708.00
$ 1,778.00
$ 1,568.00
$ 1,575.00
Wages, taxes, other expenses @20%
$ 468.00
$ 528.00
$ 468.00
$ 408.00
Long-term financing expenses (interest and dividends)
$ 90.00
$ 90.00
$ 90.00
$ 90.00
Total
$ 2,266.00
$ 2,396.00
$ 2,126.00
$ 2,073.00
Q1
Q2
Q3
Q4
Beginning Payable
$ 1,092.00
$ 1,232.00
$ 1,092.00
$ 952.00
Sales
$ 2,340.00
$ 2,640.00
$ 2,340.00
$ 2,040.00
Purchases @70% of next Qtr.
$ 1,848.00
$ 1,638.00
$ 1,428.00
$ 1,869.00
Cash Payable @33.33%
$ 616.00
$ 546.00
$ 476.00
$ 623.00
Payment of accounts
$ 1,708.00
$ 1,778.00
$ 1,568.00
$ 1,575.00
Ending Payable @ 66.67%
$ 1,232.00
$ 1,092.00
$ 952.00
$ 1,246.00
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.