Question

Using the information below, find Alpha's total gross purchases (not net

purchases).

Ending inventory $700
Beginning Inventory 2,000
Purchase returns & allowances 300
Purchase discounts 200
Operating expenses 2,400
Sales returns & allowances 800
Sales discounts 200
Net Income 800
Income tax expense 200
Sales 8,300

Answer 1

To find Alpha's total gross purchases, calculate the net purchases first and then rearrange the equation to find the total purchases.

Step-by-step explanation:

To find Alpha's total gross purchases, we need to calculate the net purchases first. Net purchases can be calculated by subtracting purchase returns & allowances and purchase discounts from the total purchases. So, net purchases = Total purchases - Purchase returns & allowances - Purchase discounts.
Net purchases = $700 (Ending inventory) + Total purchases - $300 (Purchase returns & allowances) - $200 (Purchase discounts).
We can rearrange the equation to find the total purchases:
Total purchases = Net purchases + $300 (Purchase returns & allowances) + $200 (Purchase discounts).