Erin's purchases from suppliers in a quarter are equal to 67 percent of the next quarter's forecast sales.The payables period is 60 days.Wages,taxes,and other expenses are 30 percent of sales,and interest and dividends are $90 per quarter.No capital expenditures are planned.Projected quarterly sales are: Sales for the first quarter of the following year are projected at $1,510.What is the amount of the firm's total cash outlay for the third quarter?

Question

Erin's purchases from suppliers in a quarter are equal to 67 percent of the next quarter's forecast sales.The payables period is 60 days.Wages,taxes,and other expenses are 30 percent of sales,and interest and dividends are $90 per quarter.No capital expenditures are planned.Projected quarterly sales are:  Sales for the first quarter of the following year are projected at $1,510.What is the amount of the firm's total cash outlay for the third quarter?

Quizplus · Accepted Answer

Q₃ cash outlay = 60/90(0.67 × $1,530) + 30/90(0.67 × $1,420) + (0.30 × $1,530) + $90 = $1,550

Erin's Purchases from Suppliers in a Quarter Are Equal to 67