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4. In a given quarter, a company buys inventories from suppliers in an amount equal to...

4. In a given quarter, a company buys inventories from suppliers in an amount equal to 33% of the following quarter's forecasted sales. Sales of the first quarter are projected to be $42,480. The company has a payables period of 120 days. Sales of the second quarter are projected to increase at 32.10% from the first, while sales of the third quarter are projected to increase at 12.30% from the second. Assuming a quarter of 90 days, what is total cash payment made in the third quarter for inventory purchases?

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Answer #1

Sale of the first quarter = 42480

Company buys inventories from supplier in an amount equal to 33% of the following quarter’s

forecasted sale

Payable period 120 days

Sale of 2nd quarter = 42480 + 32.10% = 56116.08

Sale of 3rd quarter = 56116.08 + 12.30% = 63018.35784

cash payment made in the third quarter for inventory purchases

Cash payment = Sale of 3rd quarter * 33%

Cash payment = 63018.35784*0.33 = 20796.05808

.

cash payment made in the third quarter = 20796.05808

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