Question 1

LPLBoots has prepared the information presented in Table 1

Table 1

		RM
Credit sales		72000
Cost of sales		36000
Credit purchases		54000
Average payables		4500
Average receivables		6,000

The management of LPLBoots is considering extending the settlement period to suppliers by the following days:

Scenario 1: 40 days

Scenario 2: 50 days

Scenario 3: 60 days

Required:

Compute the increase in the average payables, for each scenario. (3 marks)