Question

15) Classic Car Parts, Inc. uses a periodic inventory system. From the following details, calculate net purchases. Beginning merchandise inventory Ending merchandise inventory Purchases Purchase Discounts Purchase Returns and Allowances Freight In $2,000 2,300 21,000 1,000 1,300 4,400 A) $18,700 B) $20,000 C) $20,700 D) $23,300 UE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 16) When preparing financial statements under the periodic inventory system, a calculation of cost of goods sold must be made. 17) A retailer purchases goods from a manufacturer and sells them to customers. 18) When using the periodic inventory system, the process of recording the ending Merchandise Inventory is completed by making an adjusting entry. 19) Under the perpetual inventory system, purchase returns or allowances are debited to the Merchandise Inventory account by the purchaser. 20) The key difference in the closing process under the periodic inventory system is how merchandise inventory is handled.

Answer 1

OPTION A: $18700

EXPLANATION:

Under periodic inventory system,

Net purchases = purchases - purchase discounts - purchase returns & allowances

= $21000 - $1000 - $1300

= $18700