Asked by Tyler Evans on May 21, 2024
Verified
A company using the periodic inventory system has the following account balances: Merchandise 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
An inventory accounting method where the inventory count and the cost of goods sold are determined at the end of an accounting period.
Merchandise Inventory
Goods or products that a company holds with the intention of selling them to customers for a profit.
Freight In
The cost associated with transporting goods from the supplier to the buyer, which is often added to the purchase cost of inventory.
- Identify the essential role of merchandise cost calculation within perpetual and periodic inventory frameworks.
Verified Answer
LO
LaWanda OsbornMay 23, 2024
Final Answer :
B
Explanation :
To calculate the cost of merchandise purchased, we need to subtract Purchases Returns and Allowances and Purchases Discounts from Purchases and then add Freight In.
Cost of merchandise purchased = Purchases - Purchases Returns and Allowances - Purchases Discounts + Freight In
= $10,700 - $1,950 - $330 + $650
= $9,070.
Therefore, choice B is the correct answer.
Cost of merchandise purchased = Purchases - Purchases Returns and Allowances - Purchases Discounts + Freight In
= $10,700 - $1,950 - $330 + $650
= $9,070.
Therefore, choice B is the correct answer.
Learning Objectives
- Identify the essential role of merchandise cost calculation within perpetual and periodic inventory frameworks.