A company using the periodic inventory system has the following account balances: Merchandise...

Question:

A company using the periodic inventory system has the following account balances:

Merchandise Inventory at the beginning of the year, $4,000
Transportation-In, $450
Purchases, $12,000
Purchases Returns and Allowances, $2,300
Purchases Discounts, $220

The cost of merchandise purchased is equal to: _____

Periodic Inventory System:

The inventory is not updated in the periodic inventory system after every transaction of purchase or sales but it's updated at the end of the accounting period when the actual inventory stock is updated based on physical counting. The cost of goods sold and inventory account entry is booked at the end of the period.

Answer and Explanation: 1

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The cost of merchandise purchased is equal to $9,930.

The following information is required to calculate the net cost of merchandise purchased:

  • The...

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Perpetual and Periodic Inventory Systems

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Chapter 6 / Lesson 5
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Inventory systems used by organizations can be perpetual or periodic. Explore the definition of these inventory systems and understand the differences between perpetual systems and periodic systems.


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