Big Red's Purchases from Suppliers in a Quarter Are Equal

question 104

Multiple Choice

Big Red's purchases from suppliers in a quarter are equal to 71 percent of the next quarter's forecast sales.The payables period is 60 days; other expenses are paid when incurred Wages, taxes, and other expenses are 24 percent of sales, and interest and dividends are $40 per quarter.No capital expenditures are planned.Projected quarterly sales, starting with Q1, are $1,520, $1,580, $1,630, and $1,590, respectively.Sales for the first quarter of the following year are projected at $1,540.What is the amount of the total disbursements for Q2?

• A)$1,564
• B)$1,520
• C)$1,601
• D)$1,538
• E)$1,553

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Definitions:

Capital Accounts

Financial records that track the equity and investment contributions of owners or shareholders in a company.

Noncash Assets

Assets that are not in the form of cash or cash equivalents, including property, equipment, and intellectual property.

Net Income and Losses

The difference between total revenues and total expenses, indicating the financial performance of a company over a specific period.

Sale

A transaction between two parties where the ownership of goods, services, or assets is transferred from the seller to the buyer for an agreed amount of money or value.