A jeweler plans January 2017 sales to be $100,000 and planned reductions to be 15 percent of sales.If planned February 1,2017 inventory equals $300,000 (at retail)and the January 1,2017 inventory (at retail)equals $275,000,planned purchases (at retail)are $140,000.

Question

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Planned purchases (at retail) can be calculated using the formula: Planned Purchases = Sales + Reductions + Ending Inventory - Beginning Inventory. For January, this would be $100,000 (Sales) + $15,000 (15% of $100,000 for Reductions) + $300,000 (Ending Inventory for February 1) - $275,000 (Beginning Inventory for January 1) = $140,000. However, the question already assumes planned purchases are $140,000, which is the result of the calculation, not an initial given to be validated. The statement is structured to seem like it's providing information to calculate planned purchases, not stating that the calculated purchases should equal $140,000. The correct calculation confirms the $140,000 figure, but the way the statement is phrased makes it seem like a premise rather than a conclusion, which could lead to confusion about the nature of the question.

A Jeweler Plans January 2017 Sales to Be $100,000 and Planned