Candy Supplies purchases are equal to 68 percent of the following quarter's sales.Assume each month has 30 days, the accounts receivable period is 30 days, and the accounts payable period is 45 days.The estimated quarterly sales for next year, starting with Quarter 1, are $38,900, $40,600, $58,900, and $69,200, respectively.How much will the firm pay its suppliers in the third quarter?

Question

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The firm will pay its suppliers 68% of the fourth quarter's sales in the third quarter. Therefore, the payment is 68% of $69,200, which equals $47,056. However, due to the accounts payable period of 45 days, only 2/3 of this amount will be paid in the third quarter, which is $43,554.

Candy Supplies Purchases Are Equal to 68 Percent of the Following