Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Acme Co . has projected the following sales for 2 0 2 2 : Q 1 = $ 8 7 0 Q 2 = $

Acme Co. has projected the following sales for 2022:
Q1= $870
Q2= $920
Q3= $850
Q4= $950
Sales for each quarter in 2023 are projected to be 12 percent greater than the previous quarter (ie. Q12023 is projected to be 12% higher than Q42022).
Calculate expected payments to suppliers in each quarter for 2022, assuming:
1) Acme places orders during each quarter equal to 50 percent of projected sales for the next quarter. For example, if Q12023 sales are expected to be $1064, then purchases in Q4 of 2022 would be estimated to be $1064 x 0.5= $532
2) Acme's average days of payables is 90 days.
Q1 payments = Blank 1. Fill in the blank, read surrounding text.
Q2 payments = Blank 2. Fill in the blank, read surrounding text.
Q3 payments = Blank 3. Fill in the blank, read surrounding text.
Q4 payments = Blank 4. Fill in the blank, read surrounding text.
HINT: This problem is very similar to the examples regarding cash receipts (from sales and receivables), only this problem looks at cash disbursements involving purchases and payables. Recall that the average days of payables (payables period) tells us how long, on average, it takes for a company to pay for its purchases. So if the average days payable is 0, then the company pays for its purchases immediately. If the payables period is 30, then the company tends to take about 30 days to pay for its purchases. This would imply that anything purchased in the first 2 months of a quarter would be paid for in the same quarter (within 30 days of the purchase), but anything purchased in the last month of the quarter wouldn't be paid for until the first month of the next quarter.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals of Investing

Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk

12th edition

978-0133075403, 133075354, 9780133423938, 133075400, 013342393X, 978-0133075359

More Books

Students also viewed these Finance questions

Question

=+ How does this differ from the Solow model?

Answered: 1 week ago