Question

Wright Inc. has forecasted the following quarterly sales amounts for the upcoming year: Q1 = $744; Q2 = $700; Q3 = $891; Q4 = $792 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 970. What are Wright’s cash disbursements in the first quarter? (Round answer to 0 decimal places. Do not round intermediate calculations)

Answer 1

Ans.	Total cash disbursement of first Quarter   = 711
	Particulars	Q1
	Payment of accounts	522.2
	Wages, taxes & other expenses	126.48
	Interest & dividend	62
	Total	710.68
	*Calculation:
	Payment on account
	payble period is 60 days & one quarter has 90 days.
	Payable in first quarter = (60/90 * 75% of current quarter sales) + (30 / 90 * 75% of next quarter sales)
			(60 / 90 * 744 * 70%) + (30 / 90 * 700 * 70%)
			347.2 + 175
			522.2
	Wages, taxes & other expenses   =          744 * 17%
			126.48