Question

Invoice cost of merchandise purchases = $15,750, purchase discounts = $300, purchase returns and allowances = $500, cost of transportation-in = $1,500, merchandise inventory (beginning of period) = $3,000. Calculate the net cost of merchandise purchases and the merchandise inventory at the end of the period.

a. Net cost = $14,450, Inventory = $3,500
b. Net cost = $14,950, Inventory = $2,500
c. Net cost = $15,250, Inventory = $3,500
d. Net cost = $14,450, Inventory = $2,500

Answer 1

The net cost of merchandise purchases is $14,450 and the merchandise inventory at the end of the period is $17,450.

Step-by-step explanation:

To calculate the net cost of merchandise purchases, we need to subtract the purchase discounts, purchase returns and allowances, and cost of transportation-in from the invoice cost of merchandise purchases. Here's the calculation:

• Invoice cost of merchandise purchases: $15,750
• Purchase discounts: $300
• Purchase returns and allowances: $500
• Cost of transportation-in: $1,500

Net cost of merchandise purchases = Invoice cost - Purchase discounts - Purchase returns and allowances - Cost of transportation-in

Net cost of merchandise purchases = $15,750 - $300 - $500 - $1,500

Net cost of merchandise purchases = $14,450

To calculate the merchandise inventory at the end of the period, we need to add the net cost of merchandise purchases to the merchandise inventory at the beginning of the period. Here's the calculation:

• Merchandise inventory (beginning of period): $3,000
• Net cost of merchandise purchases: $14,450

Merchandise inventory at the end of the period = Merchandise inventory (beginning of period) + Net cost of merchandise purchases

Merchandise inventory at the end of the period = $3,000 + $14,450

Merchandise inventory at the end of the period = $17,450