Question

A fire destroyed some of Cholla, Inc.’s records. Information from the documents found related to inventory is listed below. Ending Inventory $ 136,800 Cost of Goods Sold 801,000 Consigned Goods 156,600 Beginning Inventory 77,400 What was the amount of inventory that was purchased during the year?

Answer 1

Answer:

$860,400

Explanation:

Cholla, Inc.’s

Cost of goods sold = Beginning inventory + Purchases − Ending inventory

Purchases = Cost of Goods Sold − Beginning Inventory + Ending Inventory

Cost of Goods Sold $801,000

Less Beginning Inventory ($77,400 )

$723,600

Add Ending Inventory $ 136,800

Amount of inventory purchased $860,400

Therefore the amount of inventory that was purchased during the year was $860,400.

Mean while the consignment inventory is not owned by the company and is not as well considered in the Cost of Goods Sold equation.