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A company using the periodic inventory system has the following account balances: Merchandise Inventory at the beginning of the year, $3,600; Freight-In, $650; Purchases, $10,700; Purchases Returns and Allowances, $1,950; Purchases Discounts, $330. The cost of merchandise purchased is equal to
A. $12,670
B. $9,070
C. $8,420
D. $17,230

Respuesta :

Answer:

Option (B) is correct.

Explanation:

Given that,

Merchandise Inventory at the beginning of the year = $3,600

Freight-In = $650

Purchases = $10,700

Purchases Returns and Allowances = $1,950

Purchases Discounts = $330

Net purchases = Purchases - Purchases Returns and Allowances - Purchases Discounts

                         = $10,700 - $1,950 - $330

                         = $8,420

Cost of merchandise purchased = Net purchases + Freight-In

                                                      = $8,420 + $650

                                                      = $9,070

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