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) $8,420
B) $17,230
C) $12,670
D) $9,070

Question

Quizplus · Accepted Answer

The cost of merchandise purchased is calculated by adding Purchases to Freight-In and then subtracting Purchases Returns and Allowances and Purchases Discounts from this total. So, $10,700 (Purchases) + $650 (Freight-In) - $1,950 (Purchases Returns and Allowances) - $330 (Purchases Discounts) = $9,070.

A Company Using the Periodic Inventory System Has the Following