Sedman Corp has projected the following sales for the coming

Sedman, Corp., has projected the following sales for the coming year: Q1 Q2 Q3 Q4 Sales $ 850 $ 930 $ 890 $ 990 Sales in the year following this one are projected to be 10 percent greater in each quarter. a. Calculate payments to suppliers assuming that the company places orders during each quarter equal to 30 percent of projected sales for the next quarter. Assume that the company pays immediately. (Round your answers to 2 decimal places, e.g., 32.16.) Q1 Q2 Q3 Q4 Payment of accounts $ 280.50 $ $ $ b. Calculate payments to suppliers assuming a 90-day payables period. (Round your answers to 2 decimal places, e.g., 32.16.) Q1 Q2 Q3 Q4 Payment of accounts $ $ $ $ c. Calculate payments to suppliers assuming a 60-day payables period. (Round your answers to 2 decimal places, e.g., 32.16.) Q1 Q2 Q3 Q4 Payment of accounts $ $ $ $

Solution

a)

As we can see that the company panys immediately for every order per period

Hence it can be noted that the payables period is zero. So we can say that the paybles at each period is 30% of the next period sales.

Payable at Q1 = 0.3 * Q2 sales = 279

Payable at Q2 = 0.3 * Q3 sales = 267

Payable at Q3 = 0.3 * Q4 sales = 297

For quarter 1 next year sales will be 10% more than the previous year quarter 1 sales = 1.1 * 850 = 935

Hence Payable at Q4 = 0.3 * next year Q1 sales = 280.5

b)

Since the payables period is 90 days which basically is one quarter hence the payment is 30% of the current period sales

Payable at Q1 = 0.3 * Q1 sales = 255

Payable at Q2 = 0.3 * Q2 sales = 279

Payable at Q3 = 0.3 * Q3 sales = 267

Payable at Q4 = 0.3 * Q4 sales = 297

c)

if the payables period is 60 days the the payments will be

Quarterly payments = 2/3 * 0.3* current sales + 1/3*0.3* next period sales

Payable at Q1 = 2/3 * 0.3 * 850 + 1/3 * 0.3*930 = 263

Payable at Q2 = 2/3 * 0.3 * 930 + 1/3 * 0.3*890 = 275

Payable at Q3 = 2/3 * 0.3 * 890 + 1/3 * 0.3*990 = 277

Payable at Q4 = 2/3 * 0.3 * 990 + 1/3 * 0.3*935 = 291.5