Question

Cortez Company updates its inventory records perpetually. The company's records showed a beginning inventory of $6,000, cost of goods sold of $14,000, and ending inventory of $8,000. How much inventory was purchased during the year?

a. $16,000.
b. $12,000.
c. $10,000.
d. $9,000

Answer 1

To determine the amount of inventory purchased by Cortez Company, we use the inventory equation and the information provided to calculate purchases as $16,000, which is the correct answer (a).

Step-by-step explanation:

To calculate how much inventory was purchased during the year by Cortez Company, we first need to recall the inventory equation: Beginning Inventory + Purchases - Ending Inventory = Cost of Goods Sold (COGS). This equation allows us to determine the amount of inventory purchased if we know the other three variables.

Using the information given:

• Beginning Inventory: $6,000
• Cost of Goods Sold: $14,000
• Ending Inventory: $8,000

We rearrange the formula to solve for Purchases:

Purchases = COGS + Ending Inventory - Beginning Inventory

Purchases = $14,000 + $8,000 - $6,000

Purchases = $22,000 - $6,000

Purchases = $16,000

So the amount of inventory purchased during the year by Cortez Company was $16,000, which is answer choice (a).