Lakeside Components wishes to purchase parts in one month for sale in the next.

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 12,400 parts. Total sales of parts are expected to be 8,800 in July and 13,800 in August. Parts are purchased at a wholesale price of $20. 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 17,000 parts in May. Required: a. Estimate purchases (in units) for June and July. July 13,2003,800units June Merchandise to be purchased b. Estimate the cash required to make purchases in June and July. Month of Payment June July Total

Explanation / Answer

Ans. Month of Payment Total June 294400 July 271200 *Calculation for payment June July May (17000*20*40%) 136000 June (13200*20*60%) 158400 June (13200*20*40%) 105600 July (13800*20*60%) 165600 Total of payment 294400 271200 *40% of May month's purchase will paid in June. *60% of june month's purchase will paid in June. *40% of june month's purchase will paid in July. *60% of july month's purchase will paid in July..

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