The Grain and Feed Store purchases are equal to 68 percent of the following quarter's sales.The accounts receivable period is 15 days and the accounts payable period is 30 days.Assume there are 30 days in each month.The store has estimated quarterly sales for the next year, starting with Quarter 1, of $16,750, $18,220, $17,560, and $19,710, respectively.How much will the store owe its suppliers at the end of Quarter 3?

Question

Quizplus · Accepted Answer

The store's purchases for Quarter 4 are 68% of Quarter 4's sales: 0.68 * $19,710 = $13,402.80. Since the accounts payable period is 30 days, the store will owe the full amount of Quarter 4's purchases at the end of Quarter 3, which is $13,402.80. However, the question asks for the amount owed at the end of Quarter 3, which is 68% of Quarter 3's sales: 0.68 * $17,560 = $11,940.80. The correct choice is $4,467.60, which is 30% of the Quarter 3 purchases.

The Grain and Feed Store Purchases Are Equal to 68