Question

Calculating Payments

	Q1	Q2	Q3	Q4
Sales	9,300	12,100	17,000	16,800

Sales in the year following this one are projected to be 12% greater in each quarter.
Calculate payments to suppliers assuming that Palladium Catalysis places orders during each quarter equal to 25% of projected sales for the next quarter. Assume that Palladium pays immediately.

Problem: Calculate Payment of accounts for Q1 threw Q4

Answer 1

Payments for 25% of projected orders are made in the current quarter. Therefore sale over and above 25% of projections are made during the quarter and there 75% of orders for current quarter sales are placed in the current quarter and therefore payments are made in the current quarter.

The Payments during the quarter are computed as under:

	Year 1				Year 2
	Q1	Q2	Q3	Q4	Q1 - Year 2
Sales - Year 1	9,300	12,100	17,000	16,800	18816
Payments - ordered in last qrtr @75% of current sales	6975	9075	12750	12600
Payments - ordered in Current qrtr @25% of projected sales	3025	4250	4200	4704
Total Payments made	10000	13325	16950	17304