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Wright Inc. has forecasted the following quarterly sales amounts for the upcoming year: Q1 = $748;...

Wright Inc. has forecasted the following quarterly sales amounts for the upcoming year:

Q1 = $748; Q2 = $678; Q3 = $899; Q4 = $789

Wright’s purchases from suppliers in a quarter are equal to 70% of the next quarter's forecasted sales. The payables period is 60 days. Wages, taxes, and other expenses are 17% of sales, and interest and dividends are $62 per quarter. No capital expenditures are planned.

Sales in Q1 of the following year are expected to be 961. What are Wright’s cash disbursements in the fourth quarter? (Round answer to 0 decimal places. Do not round intermediate calculations)

Solutions

Expert Solution

Since the payables period is 60 days, payables in each period = 2/3 of last quarter’s orders, and 1/3 of this quarter’s orders, or 2/3(.75) times current sales + 1/3(.75) next period sales.

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jeff jeffy answered 1 year ago
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