Question

Kennel Company reported the following: Cost of goods sold (estimated for next period) $300,000 Ending inventory (estimated for next period) $95,000 Beginning inventory for the period $60,000 Based on this information, the purchases for the next period should be:

A. $265,000.
B. $360,000.
C. $395,000.
D. $335,000.

Answer 1

Answer: option d

Explanation: In simple words, purchases refers to the amount of resources taken in by the organisation in return for paying money or incurring a liability to pay in future.

It can be computed using following formula :-

Purchases = cost of goods sold - opening stock + closing stock'

Putting the values into equation we get :-

Purchases = $300,000 - $60,000 + $95,000

                  = $335,000