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Inventory Calculations

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During 2005, Purchases were $1,320,000; Purchases Adjustments were 10% of net Purchases; Cost of Goods Purchased was $1,440,000; Inventory decrease by 1/3 and is $360,000 at 12/31/05 (fiscal end).

Comute FYE 12/31/05, the amount of :
1) Purchases Adjustments
2) Freight-In
3) Beginning Inventory
4) Cost of Goods Sold

CLUE must match: Net Purchases + Cost of Goods Available for Sale is $3,180,000

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Solution Summary

The solution explains the inventory calculations relating to Purchases Adjustments, Freight-In, Beginning Inventory and Cost of Goods Sold

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1) Purchases Adjustments - The purchase adjustment are 10% of net purchase. Net purchase = Purchases Less Purchase Adjustment. If net purchase is x then x + 10% x = 1,320,000. This gives net pruchases as 1,200,000 and purchase ...

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