Question

Paymore Products places orders for goods equal to 75% of its sales forecast in the next quarter which has been provided in the below table.

	Quarter in Coming Year					Following Year
	First	Second	Third	Fourth		First Quarter
Sales forecast	$420	$342	$346	$394		$394

On average, one-third of sales are collected in the quarter that they are sold, and two-thirds are collected in the following quarter. Assume that sales in the last quarter of the previous year were $346. Also, one third of the orders are paid for in the current month and then two thirds of the next quarter's orders are paid in advance. Assuming that Paymore’s labor and administrative expenses are $75 per quarter and that interest on long-term debt is $50 per quarter, work out the net cash flow for Paymore for the coming year using the below table. (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)

	first	second	third	forth
source of cash
collection on acct receivable
uses of cash
payment of acct payable
labor and admin expense
interest on long term debt
total use of cash
net cash flow/(out flow)

Answer 1

Net cash flow for the coming year is:

Q1 = -12.83; Q2 = -14.50; Q3 = -77.17; Q4 = 138.50

Calculations shown below: