Asked by Jordan Nolte on May 06, 2024
Verified
A company using the periodic inventory system has the following account balances: Inventory at the beginning of the year, $3,600; Freight In, $650; Purchases, $10,700; Purchases Returns and Allowances, $1,950; Purchases Discounts, $330. The cost of merchandise purchased is equal to
A) $12,670
B) $9,070
C) $8,420
D) $17,230
Periodic Inventory System
A method of inventory valuation for financial reporting purposes where a physical count of inventory is performed at specific intervals, and cost of goods sold is calculated at the end of the accounting period.
Merchandise Purchased
The total cost of goods bought for resale during a specific accounting period.
Purchases Discounts
A reduction in the price of goods that a buyer can take advantage of if they pay by a certain date.
- Calculate corrections for reductions in inventory and the expense related to acquiring merchandise.
Verified Answer
Cost of Merchandise Purchased = $10,700 + $650 - $1,950 - $330 = $9,070.
Learning Objectives
- Calculate corrections for reductions in inventory and the expense related to acquiring merchandise.
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