During the year 2010, the inventory of Debra's Gift Shop decreased by $50,000. If the income statement for the year 2010 reported cost of goods sold of $350,000, purchases during the year must have amounted to:

Question

Quizplus · Accepted Answer

The decrease in inventory of $50,000 indicates that less inventory was purchased during the year than was sold. To find the actual amount of purchases, we need to add the cost of goods sold to the decrease in inventory:
Purchases = Cost of goods sold + Decrease in inventory
Purchases = $350,000 - $50,000
Purchases = $300,000

Therefore, the correct answer is C) $300,000.

During the Year 2010, the Inventory of Debra's Gift Shop