Paymore Products places orders for goods equal to 75% of its sales forecast in the next quarter. The sales forecasts for the next five quarters are as follows: Quarter in Coming Year Following Year First Second Third Fourth First Quarter Sales forecast $372 $360 $336 $384 $384 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 $336. What is the forecast for Paymore’s cash receipts in each quarter of the coming year?
It is given that Paymore purchases goods equal to .75 of its sale forecast in the next quarter. So they must purchase the stock a quarter before of the forecast. Therefore, we will multiply .75 with the 1 quarter future sale forecast. Also notice that we are given the actual sales figure for the last year 4th quarter and i.e $336. Hence, we will not calculate this based on future forecast but will take this figure as sales.
| Quarter | Sales ForeCast(Upcoming Quarter) | Order(.75 of forecast) | Payment Received in each quarter | Amount |
| Last year quarter 4 | 336 | |||
| 1 | 372 | 270(360*.75) | (336*2/3)+(270*1/3) | 314 |
| 2 | 360 | 252(336*.75) | (270*2/3)+(252*1/3) | 264 |
| 3 | 336 | 288(384*.75) | (252*2/3)+(288*1/3) | 264 |
| 4 | 384 | 288(384*.75) | (288*2/3)+(288*1/3) | 288 |
| 5 | 384 | TOTAL | 1130 |
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