Question

Kumar Corporation, operates department stores located primarily in the Southwest , Southeast , and Midwest. In its 2019 second- quarter report, the company reported Cost of Goods Sold of $1,300 million, ending inventory for the second quarter of $ 2,200 million and ending inventory for the previous quarter of $ 1,800 million. Determine the amount of merchandise purchases for the second quarter. (Enter your answer in millions.)

Answer 1

The amount of merchandise purchases for Kumar Corporation in the second quarter is $1,700 million, which is calculated by adding the ending inventory to the cost of goods sold and subtracting the beginning inventory.

Step-by-step explanation:

To determine the amount of merchandise purchases for Kumar Corporation in the second quarter, we will use the following formula, which is based on the Cost of Goods Sold (COGS) equation:

Merchandise Purchases = COGS + Ending Inventory - Beginning Inventory

We are given that COGS for the second quarter is $1,300 million, the ending inventory for the second quarter is $2,200 million, and the ending inventory for the previous quarter (which is the beginning inventory for the second quarter) is $1,800 million.

The calculation is therefore:
$1,300 million (COGS) + $2,200 million (Ending Inventory) - $1,800 million (Beginning Inventory) = $1,700 million in merchandise purchases for the second quarter.