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

We can use the following formula to calculate the total purchases of merchandise:

Total Purchases = Cost of Goods Sold + Increase in Inventory - Decrease in Accounts Payable

Since there is no information given about any decrease in accounts payable, we can assume it to be zero.

Therefore, Total purchases = $374,000 + $51,000 - $8,700 = $416,300

So, the correct answer is (B) $425,000.

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