Use this information to answer the following question. In addition,beginning merchandise inventory was $11,000 and ending merchandise inventory was $7,000.
Net cost of purchases for the period were
A)$37,000.
B)$21,000.
C)$27,000.
D)$33,000.

Question

Use this information to answer the following question.  In addition,beginning merchandise inventory was $11,000 and ending merchandise inventory was $7,000.
Net cost of purchases for the period were
A)$37,000. 
B)$21,000. 
C)$27,000. 
D)$33,000.

Quizplus · Accepted Answer

Net cost of purchases = Cost of Goods Sold +(Ending Inventory - Beginning Inventory)
Given,
Beginning Inventory = $11,000
Ending Inventory = $7,000
Cost of Goods Sold = $52,000 (calculated as Sales - Gross Profit)
Sales = $80,000
Gross Profit = 35% of Sales = $28,000
Therefore,
Net cost of purchases = $52,000 + ($7,000 - $11,000) = $52,000 - $4,000 = $48,000
Hence, the answer is option C.

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