Lakeside Components wishes to purchase parts in one month for sale in the next. On...
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Accounting
Lakeside Components wishes to purchase parts in one month for sale in the next. On June 1, the company has 9,000 parts in stock, although sales for June are estimated to total 11,900 parts. Total sales of parts are expected to be 12,500 in July and 9,800 in August.
Parts are purchased at a wholesale price of $20. 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. Lakesidepurchased 16,000 parts in May.
Required:
a.Estimate purchases (in units) for June and July.
b.Estimate the cash required to make purchases in June and July.
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