Financial Statements of ABC Corp. indicates that ending inventory levels in 2005 and 2006 were $200,000 and $350,000 respectively. Cost of goods sold for 2005 and 2006 were $1,900,000 and $2,200,000 respectively. Purchases in 2006 were:
A)$1,950,000
B)$2,150,000
C)$2,350,000
D)$1,850,000

Question

Quizplus · Accepted Answer

The formula for calculating purchases is:
Purchases = Cost of Goods Sold + Ending Inventory - Beginning Inventory
Using the information provided, we can calculate purchases for 2006:
Purchases = $2,200,000 + $350,000 - $200,000
Purchases = $2,350,000
Therefore, the correct answer is choice C, $2,350,000.