Lakeside Components wishes to purchase parts in one month for sale in the next. On June 1, the company has 11,000 parts in stock, although sales for June are estimated to total 10,800 parts. Total sales of parts are expected to be 8,200 in July and 14,500 in August.
Parts are purchased at a wholesale price of $25. The supplier has a financing arrangement by which Lakeside Components pays 60 percent of the purchase price in the month when the parts are delivered and 40 percent in the following month. Lakeside purchased 13,000 parts in May.
Required:
a. Estimate purchases (in units) for June and July. ( I already know is June- 8000 July 14500)
b. Estimate the cash required to make purchases in June and July. Need the answer for part B.
Expert Answer
The estimated cash requirements are as follows:-