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

Question

Quizplus · Accepted Answer

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.

A Company Using the Periodic Inventory System Has the Following