Question

King's Boot Company uses a perpetual inventory system. The beginning balance in its inventory account is $1,500 and the ending balance is $1,000. Cost of goods sold is $6,500. What was the amount of inventory purchased during the year?

a. $7,000
b. $7,500
c. $500
d. $6,000

Answer 1

The amount of inventory purchased during the year, calculated using the perpetual inventory system formula, is $6,000. This figure accounts for the cost of goods sold, beginning inventory, and ending inventory. Thus the correct option is d. $6,000

Step-by-step explanation:

To determine the amount of inventory purchased during the year using a perpetual inventory system, we can use the formula:

`\[ \text{Inventory purchased} = \text{Cost of goods sold} + \text{Ending inventory} - \text{Beginning inventory} \]`

Given:

Beginning inventory = $1,500

Ending inventory = $1,000

Cost of goods sold = $6,500

Substitute the values into the formula:

`\[ \text{Inventory purchased} = \$6,500 + \$1,000 - \$1,500 = \$6,000 \]`

Therefore, the amount of inventory purchased during the year is $6,000. This represents the cost of inventory acquired by the company over the course of the year, which is essential information for understanding the company's financial performance and inventory management.Thus the correct option is d. $6,000