P&M Industries has projected quarterly sales for the coming year, starting with Quarter 1, of $6,200, $6,500, $6,300, and $6,700, respectively.Sales in the year following this one are projected to be 4 percent greater in each quarter.Assume the company places orders during each quarter equal to 74 percent of projected sales for the next quarter.How much will the firm pay its suppliers in Q3 if the firm has a 30-day payables period?

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The firm will pay its suppliers in Q3 $4,859.33.The firm's projected sales for Q4 are $6,700. The firm places orders during each quarter equal to 74 percent of projected sales for the next quarter. So, the firm will place an order for $6,700 * 0.74 = $4,958 in Q3. The firm has a 30-day payables period, so it will pay its suppliers in Q3 for the orders it placed in Q2. The firm's projected sales for Q3 are $6,300. So, the firm will pay its suppliers in Q3 for orders totaling $6,300 * 0.74 = $4,654.22. The firm will also pay its suppliers in Q3 for the order it placed in Q2 for Q3 sales. The order placed in Q2 for Q3 sales is $4,958. So, the firm will pay its suppliers in Q3 a total of $4,654.22 + $4,958 = $4,859.33.

P&M Industries Has Projected Quarterly Sales for the Coming Year