Paymore Products places orders for goods equal to 75% of its sales forecast in the next quarter. The sales forecasts for the next fivequarters are as follows:Sales forecastQuarter1234First$ 492CollectionsQuarter in Coming YearSecondThird$ 346$ 355Fourth$ 403On 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 $355. What is the forecast for Paymore's cash receipts in each quarterof the coming year?Note: Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.Following YearFirst Quarter$ 403

Budgets means estimates or forecasts made for future period of time. Expected cash receipts shows…

Answered: Paymore Products places orders for…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Paymore Products places orders for goods equal to 75% of its sales forecast in the next quarter which has been provided in the below table. Following Year Quarter in Coming Year Second $362 Third $338 Fourth $386 First First Quarter Sales forecast $374 $386 Paymore's labor and administrative expenses are $67 per quarter and interest on long-term debt is $42 per quarter. Paymore's cash balance at the start of the first quarter is $40 and its minimum acceptable cash balance is $30. Assume that Paymore can borrow up to $338 from a line of credit at an interest rate of 2% per quarter. 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 $338. On average, two-thirds of purchases are paid for in the quarter that they are purchased, and one-third are paid in the following quarter. Prepare a short-term financing plan using the above table. (Leave no…
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