Big Red's purchases from suppliers in a quarter are equal to 71 percent of the next quarter's forecast sales.The payables period is 60 days; other expenses are paid when incurred Wages, taxes, and other expenses are 24 percent of sales, and interest and dividends are $40 per quarter.No capital expenditures are planned.Projected quarterly sales, starting with Q1, are $1,520, $1,580, $1,630, and $1,590, respectively.Sales for the first quarter of the following year are projected at $1,540.What is the amount of the total disbursements for Q2?

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Quizplus · Accepted Answer

Total disbursements for Q2 include payments for purchases from suppliers (71% of Q3 sales), wages, taxes, and other expenses (24% of Q2 sales), and interest and dividends ($40). Calculating these gives: Purchases = 0.71 * $1,630 = $1,157.3, Expenses = 0.24 * $1,580 = $379.2, Interest and Dividends = $40. Total disbursements = $1,157.3 + $379.2 + $40 = $1,576.5. However, considering the payables period, only part of the purchases will be paid in Q2, leading to a total of $1,553.

Big Red's Purchases from Suppliers in a Quarter Are Equal