Use this information to answer the following question. In addition,beginning merchandise inventory was $11,000 and ending merchandise inventory was $7,000.
Net cost of purchases for the period were
A)$37,000.
B)$21,000.
C)$27,000.
D)$33,000.

Question

Use this information to answer the following question.  In addition,beginning merchandise inventory was $11,000 and ending merchandise inventory was $7,000.
Net cost of purchases for the period were
A)$37,000. 
B)$21,000. 
C)$27,000. 
D)$33,000.

Quizplus · Accepted Answer

To calculate the net cost of purchases, we need to subtract the ending merchandise inventory from the sum of beginning merchandise inventory and purchases.

Beginning merchandise inventory = $11,000 
Ending merchandise inventory = $7,000

Net purchases = Beginning merchandise inventory + Purchases - Ending merchandise inventory

We don't have the exact amount of purchases, but we can calculate it by rearranging the formula as:

Purchases = Net purchases - Beginning merchandise inventory + Ending merchandise inventory

We are given the cost of goods sold as $39,000, which is equal to the sum of net purchases and beginning inventory minus ending inventory.

Cost of goods sold = Net purchases + Beginning merchandise inventory - Ending merchandise inventory

$39,000 = Net purchases + $11,000 - $7,000 
$39,000 = Net purchases + $4,000 
Net purchases = $35,000

Now we can use the formula above to find the cost of purchases:

Cost of purchases = Net purchases - Beginning merchandise inventory + Ending merchandise inventory

Cost of purchases = $35,000 - $11,000 + $7,000 = $31,000

Therefore, the best choice is C) $27,000, which is not one of the options provided.

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