Chapter 13, Problem 32E

Estimate Purchases and Cash Disbursements

Midland Company buys tiles and prints different designs on them for souvenir and gift stores. It buys the tiles from a small company in Europe, so at all times it keeps on hand a stock equal to the tiles needed for three months’ sales. The tiles cost $3 each and must be paid for in cash. The company has 28,000 tiles in stock. Sales estimates, based on contracts received, are as follows for the next six months:

Required

1. a.      Estimate purchases (in units) for January, February, and March.
2. b.      Estimate cash required to make purchases in January, February, and March.