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Home Q & A Board Other Fields Homework Help Business Accounting
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Psyche Taloza M-Verano Psyche Taloza M-Verano
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2 years ago
In a periodic inventory system, the entry to record the sale of $2,000 of merchandise on account. If there is no freight in and total purchases were $8250, how much were purchased returns and allowances.
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#1
Educator
2 years ago
$350

Solution:

Following information is given:

Cost of Goods Sold = $7400

Opening inventory = $3500

Purchase = $8250

Closing stock = $4000

Calculation to find PURCHASE RETURNS:

Cost of Goods Sold = Opening Inventory + Net Purchase + Direct Expenses - Closing Inventory

By substituting the values, we get:

7400 = 3500 + Net Purchase + 0 - (4000)

Net Purchase = 7400 + 4000 - 3500

= $7900

Therefore, Net Purchase = Total Purchase - Purchase Returns

7900 = 8250 - Purchase returns

Purchase Returns = 8250 - 7900

= $350
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