Final answer:
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).