Nadine's Boutique has an accounts payable period of 30 days. Sales of $3,300, $3,400, $4,600, and $4,100 are expected for Quarters 1 through 4, respectively. The cost of goods sold is equal to 62 percent of the next quarter's sales. The accounts payable balance is $975 as of the beginning of Quarter 1. What is the amount of the projected cash disbursements for accounts payable for Quarter 2 of next year? Assume a year has 360 days.

Question

Quizplus · Accepted Answer

To calculate the projected cash disbursements for accounts payable for Quarter 2, we need to first determine the cost of goods sold for Quarter 2.

Cost of goods sold for Quarter 2:
= 62% x Sales for Quarter 3
= 62% x $4,600
= $2,852

Next, we need to determine the total amount of accounts payable owed for Quarter 2, which includes the previous quarter's unpaid balance and the current quarter's purchases on credit.

Accounts payable owed for Quarter 2:
= Beginning Accounts Payable balance + Cost of Goods Sold for Quarter 2
= $975 + $2,852
= $3,827

Since the accounts payable period is 30 days, the projected cash disbursements for accounts payable for Quarter 2 will be the amount of accounts payable owed for that quarter divided by the number of days in a year, multiplied by the number of days in a quarter.

Projected cash disbursements for accounts payable for Quarter 2:
= (Accounts Payable owed for Quarter 2/360) x 90
= ($3,827/360) x 90
= $2,604

Therefore, the answer is D) $2,604.

Nadine's Boutique Has an Accounts Payable Period of 30 Days