Question

West Company has the following balances:

Purchases $35,000
Sales Return and Allowances $4,000
Purchase Discounts $2,500
Freight-in $1,875
Delivery Expense $2,500

The cost of goods purchased for the period is?
A. $37,500
B. $34,375
C. $36,875
D. $32,875

Answer 1

The cost of goods purchased for the period can be calculated by subtracting the sales return and allowances, purchase discounts, freight-in, and delivery expense from the purchases. Using the given values, the cost of goods purchased for the period is $23,125.

Step-by-step explanation:

The cost of goods purchased is calculated by starting with the purchases total and adjusting for purchase discounts and freight-in, but not including sales returns and allowances, or delivery expenses as those are related to sales. To calculate the cost of goods purchased, subtract purchase discounts from purchases and add freight-in costs:

• Purchases: $35,000
• Purchase Discounts: -$2,500
• Freight-in: +$1,875

So, the calculation would be:

Purchases - (Sales Return and Allowances + Purchase Discounts + Freight-in + Delivery Expense)

Using the given values:

$35,000 - ($4,000 + $2,500 + $1,875 + $2,500) = $35,000 - $11,875 = $23,125

Therefore, the cost of goods purchased for the period is $23,125.