Gyrl Skateboards manufactures skateboard decks.Guy Gyrl,the CEO,is forecasting cash flows for the next few months.Forecasted sales are shown on the top row of the table.Gyrl's cost of goods sold is 81.2% of sales.Gyrl buys its raw materials one month prior to the sale of the finished product.It pays for half of its raw materials in the same month as the purchase and half in the following month.What are Gyrl's total payments to suppliers in January?
Gyrl Skateboards Inc.
Sales and Payments Forecast ($000s)

Question

Quizplus · Accepted Answer

Payments to suppliers in January = 0.50 × January Purchases + 0.50 × December Purchases
Purchases in December = 0.812 × January Sales
Purchases in December = 0.812 × $2,545 = $2,067
Purchases in January = 0.812 × February Sales
Purchases in January = 0.812 × $2,795 = $2,270
Payments to suppliers in January = 0.50 × $2,270 + 0.50 × $2,067
Payments to suppliers in January = $1,135 + $1,033 = $2,168

Gyrl Skateboards Manufactures Skateboard Decks