Problem
Wycliff Contractors, Inc. has the following monthly purchasing schedule and ending accounts payable.
|
Dec.
|
Jan.
|
Feb.
|
Mar.
|
Apr.
|
May
|
June
|
|
Purchases
|
$400
|
$375
|
$350
|
$325
|
$400
|
$500
|
$650
|
|
Ending payables
|
|
342
|
320
|
297
|
345
|
430
|
555
|
A. Calculate the days payables outstanding for March, April, May, and June using quarterly purchases to calculate the average daily purchases.
B. What is your conclusion regarding the firm's payment behavior?
C. The following table shows the amount of payables remaining in successive months for purchases made during the January through June period of operations. Convert the table to a balance fraction matrix and discuss the firm's payment pattern as represented by the balance fraction table.
|
Accounts Payable Balances
|
|
Purchases
|
Jan.
|
Feb.
|
Mar.
|
Apr.
|
May
|
June
|
|
Jan.
|
$375
|
$262
|
$75
|
|
|
|
|
|
Feb.
|
350
|
|
245
|
$70
|
|
|
|
|
Mar.
|
325
|
|
|
227
|
$65
|
|
|
|
Apr.
|
400
|
|
|
|
280
|
$80
|
|
|
May
|
500
|
|
|
|
|
350
|
$100
|
|
June
|
650
|
|
|
|
|
|
455
|
|
|
NA
|
$320
|
$297
|
$345
|
$430
|
$555
|
D. What is your conclusion about the firm's payment pattern?