The following information is available for Pear Limited for 2020: $\begin{array}{llcc}
\text {Accounts payable, beginning.................................................................... } &\$14,000 \
\text { Cash payments on account during year.................................................... } &54,000\
\text {Purchase discounts taken during year on 2020 purchases.......................... } &1,200\
\text {Accounts payable, ending.......................................................................... } &7,000\
\end{array}$
Assuming the company records purchases at gross amounts, the total purchases for 2020 would be
A) $48,200.
B) $61,000.
C) $55,200.
D) $59,800.

Question

The following information is available for Pear Limited for 2020: $\begin{array}{llcc}
  \text {Accounts payable, beginning....................................................................  } &\$14,000  \
 \text { Cash payments on account during year.................................................... } &54,000\
 \text {Purchase discounts taken during year on 2020 purchases..........................  } &1,200\
 \text {Accounts payable, ending..........................................................................  } &7,000\
\end{array}$
 Assuming the company records purchases at gross amounts, the total purchases for 2020 would be
A) $48,200.
B) $61,000.
C) $55,200.
D) $59,800.

Quizplus · Accepted Answer

The total purchases for 2020 would be $48,200. This is calculated as follows:Beginning accounts payable + Purchases - Ending accounts payable - Purchase discounts = Total purchases$14,000 + Purchases - $7,000 - $1,200 = $48,200

The Following Information Is Available for Pear Limited for 2020