Stockton- Meadows Incorporated reports an increase in Accounts Payable of $8,700 and an increase in inventory of $51,000 for the current year. Accounts Payable relates solely to the purchase of merchandise. Sales on account were $529,000 and cost of goods sold was $374,000. The total purchases of merchandise for the period were:

Question

Quizplus · Accepted Answer

The total purchases of merchandise can be calculated using the formula: Purchases = Cost of Goods Sold + Increase in Inventory - Increase in Accounts Payable. Therefore, Purchases = $374,000 + $51,000 - $8,700 = $416,300. However, since the increase in Accounts Payable is related to purchases, the correct calculation is Purchases = Cost of Goods Sold + Increase in Inventory = $374,000 + $51,000 = $425,000.

Stockton- Meadows Incorporated Reports an Increase in Accounts Payable of $8,700