Cash management task 8
clara
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Thank you Mike that is so helpful. Could you help me with this too:
Company pays supplier 25% month after purchase,45% two months after and remaking 30% month after that
At end month 3 trade payable forecast is made up of:
Bal month 1. 18200
Bal month 2. 60,000
Bal month 3. 105,500
What is settlement of month 3 trade payables for month 4 and month 5
Just can't quite work out right. Please help.
Thank you.0 
Assuming that's the whole question, I think this is right (I don't trust answers that aren't round numbers). If I've done it wrong, hopefully someone will correct me.
Month 1: Purchases = 18,200
Month 2: 25% of M1 paid = 4,550. Balance of M1 purchases = 13,650 so M2 purchases = 46,350 (60,000  13,650).
Month 3: 40% of M1 paid = 8,190, 25% of M2 paid = 11,587.50. Balance of M1 is now 5,460 (18,2004,5508,190). Balance of M2 is 34,762.50 (46,35011587.50) so M3 purchases = 65,277.50 (105,50034,762.505,460)
Month 4: 30% of M1 (5,460) + 45% of M2 (20,857.50) + 25% of M3 (16,319.38) = £42,636.88 paid
Month 5: 30% of M2 paid (13,905) + 45% of M3 paid (29,374.88) = £43,279.88 paid0 
Hey Clara,
Which book are you using to practice? I have not come across some these Questions, in this much details before.0 
Hi can anyone help me wiv aat assessment 1 2014 task 3b and task 10

A company has supplied information regarding its forecast sales, labour costs and purchases:
Purchases: The company pays its suppliers on the basis of
25% one month after the date of purchase, 45% two months after the date of purchase and 30% three months after the date of purchase. At the end of period 3 the balance of trade payables is forecast to be:
Balance from period 1 =£18,200
Balance from period 2 =£60,000
Balance from period 3 =£105,500
What is settlement of month 3 trade payables for month 4 and month 5

Solution:
The question is really asking to calculate payments that will be made in period 4&5.
To do this we need to find out the original purchase amount which is missing in the question.
So we will make a simple key of purchase payment as follows:
Purchase Payments Key:
one month after: 25%
two months after: 45%
three months after: 30%
So the payments schedule will follow the following pattern:
For purchases made in PR1:
Payments will be 25% in period 2; 45% in period 3; 30% in period 4
For purchases made in PR2:
Payments will be 25% in period 3; 45% in period 4; 30% in period 5
For purchases made in PR3:
Payments will be 25% in period 4; 45% in period 5; 30% in period 6
The original purchase figure which is missing can now be calculated with the following formula:
Purchase = (100% / % of Bal left) × Bal left in £'s
Purchase in PR1: (100% / 30% Bal left) × £18200 Bal left = £60666.67
Purchase in PR2: (100% / 75% Bal left) × £60000 Bal left = £80000 Purchase in PR3: (100% /100% Bal left) × £105500 Bal left = £105500
Now, look back at the purchase payment schedule done above.
So, we can see that in period 4 we will make the following payments:
From Purchase in PR1 0.30 × 60666.67 = 18,200
From Purchase in PR2 0.45 × 80000 = £36,000
From Purchase in PR3 0.25 × 105500 = £26,375
Total Payments in Period 4 = 80,575
And, In period 5 we will make the following payments:
From Purchase in PR2 0.30 × 80000 = £24000
From Purchase in PR3 0.45 × 105500 = £47475
Total Payments in Period 5 = £71,475
Additionally, Period 3 TAccounts will look like as under:
0
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