Question

If Cost of Goods Sold is $145,000 and the beginning and ending Inventory balances are $18,000 and $13,000, respectively, inventory purchases equal:_______
A. $145,000.
B. $140,000.
C. $150,000.
D. $132,000.

Answer 1

Answer:

B. $140,000.

Explanation:

Inventory purchases refers to the amount of goods or merchandise bought during a particular period by merchandisers or sellers such as retailers, wholesalers, or distributors with aim of selling them to customers.

Inventory purchases can be determined using the formula for computing the cost of goods sold as follows:

Cost of goods sold = Beginning inventory + Inventory purchases - Ending inventory

Substituting the values in the question into the formula above and solve for inventory purchases, we have:

$145,000 = $18,000 + Inventory purchases - $13,000

Inventory purchases = $145,000 + $13,000 - $18,000 = $140,000

Therefore, inventory purchases equal $140,000.