Question

The Thunder Dan's Corporation's purchases from suppliers in a quarter are equal to 65 percent of the next quarter's forecasted sales. The payables period is 60 days. Wages, taxes, and other expenses are 16 percent of sales, and interest and dividends are $60 per quarter. No capital expenditures are planned. Sales for the first quarter of the following year are projected at $720. The projected quarterly sales are: Q1 Q2 Q3 Q4 Sales $690 $660 $590 $560 What is the amount of the total disbursements for Quarter 2

Answer 1

Total disbursement for Q2 $579,43‬

Step-by-step explanation:

We will assume the sales are purchase are uniform during the year.

therefore days 1-30 sales are paid within the quarter

and day 31 to 90 are paid the next quarter:

Q1:

Purchase for Q2 x 65% = 660 x 65% = 429

Q2:

dividends = 60 dollars

wages taxes and other 660 x 16% = 105.6‬

payment to suppliers

remainder of next quarter:

660 x 65% x 2/3 =286

payment of this quarter purchase:

590 x 65% x 1/3 = 383,5 x 1/3 = 127,83

Total disbursements:

60 + 105.6 + 286 + 127.83 = 579,43‬