Thunder Dan Corp.’s purchases from suppliers in a quarter are equal to 75% of the next quarter’s forecasted sales. Calculate cash outlays.

Excel File


The Thunder Dan Corp.’s purchases from suppliers in a quarter are equal to 75% of the next quarter’s forecasted sales.
The payables period is 60 days. Wages, taxes and expenses are 30% of sales, while interest and dividends are $60 per quarter.
No capital expenditures are planned. Calculate cash outlays.

PayablesPeriod 60
Purchase%      0.75
Costs (of Sales_ 0.3
Interest + Div    $60

Projected quarterly sales are:
Q1 Q2 Q3 Q4 Q1
Projected Sales $600 $800 $750 $300 $510 (From Question Text)
Sales in the first quarter of next year are projected at $510.

Projected purchases are: Q1 Q2 Q3 Q4
Projected purchases $600 $562.50 $225 $383 (Next Quarter projected sales * Purchase%)


Cash outlays are as follows. 500
Q1 Q2 Q3 Q4
Payment of accts. $500.00 $587.50 $450.00 $277.50
Wages, etc. $180 $240 $225 $90
Interest and dividends $60 $60 $60 $60
Total outlays $740.00 $887.50 $735.00 $427.50

Payables each period = Payable Period/90 x purchase% x current sales + (90 - Payables Period)/90 x Purchase% x  next Q sales