Question

A fire destroyed some of Powell Company's records. Information from the documents found related to inventory is listed below. Ending Inventory $76,000 Cost of Goods Sold 445,000 Consigned Goods 87,000 Beginning Inventory 43,000 What was the amount of inventory that was purchased during the year

Answer 1

Answer:

$478,000

Explanation:

Purchase inventory = cost of goods sold + ending inventory - beginning inventory

Purchase = (445,000 + 76,000) - 43,000 = $478,000

Answer 2

Answer:

The amount of inventory purchased during the year is $508,000.00 which is Closing Inventory + Cost of Goods Sold - Opening Inventory, i.e. $(76,000 + 445,000 - 43,000).  Alternatively, you can say it is the difference between Cost of goods available for sale minus Opening Inventory.

Explanation:

Cost of Goods Sold plus Closing Inventory equal Cost of goods available for sale.  Note that the consigned goods of $87,000 is already included in Cost of Goods Sold, so there is no need for adjusting our workings with the figure.  Remember that the P & L Accounts formula for Cost of Goods Sold is Opening Inventory + Purchases - Closing Inventory.  For this problem, we have to work backward from the Cost of Goods Sold in order to obtain the amount of inventory purchased during the year.