Reference no: EM132315910

Question :

Lakeside Components wishes to purchase parts in one month for sale in the next. On June 1, the company has 8,000 parts in stock, although sales for June are estimated to total 11,200 parts. Total sales of parts are expected to be 11.500 in July and 14,800 in August.

Parts are purchased at a wholesale price of $15. The supplier has a financing arrangement by which Lakeside Components pays 70 percent of the purchase price in the month when the parts are delivered and 30 percent in the following month. Lakeside purchased 14,000 parts in May.

Required:

a. Estimate purchases (in units) for June and July.

                                                   June            July

Merchandise to be purchased           14,700      14,800 units

b. Estimate the cash required to make purchases in June and July.

June    $    217,350
July