During the year, Megan's Pet Shop's merchandise inventory decreased by $80,000.If the company's cost of goods sold for the year was $1,200,000, purchases would have been
A)$1,280,000.
B)$1,120,000.
C)$1,040,000.
D)Unable to determine.

Question

Quizplus · Accepted Answer

The formula for calculating purchases is: Purchases = Cost of Goods Sold + Ending Inventory - Beginning Inventory. Since the inventory decreased by $80,000, it means the ending inventory is $80,000 less than the beginning inventory. Therefore, Purchases = $1,200,000 - $80,000 = $1,120,000.

During the Year, Megan's Pet Shop's Merchandise Inventory Decreased by $80,000.If