Northwest Fur Co. started 2018 with $102,000 of merchandise inventory on hand. D

Question

Northwest Fur Co. started 2018 with $102,000 of merchandise inventory on hand. During 2018, $550,000 in merchandise was purchased on account with credit terms of 3/15, n/45. All discounts were taken. Purchases were all made f.o.b. shipping point. Northwest paid freight charges of $9,000. Merchandise with an invoice amount of $4,900 was returned for credit. Cost of goods sold for the year was $372,000. Northwest uses a perpetual inventory system.

Assuming Northwest uses the gross method to record purchases, what is the cost of goods available for sale?

Multiple Choice

$659,500.

$639,600.

$656,100.

$639,747.

Explanation / Answer

D.$639,747.

the following is the required table:

Beginning inventory $102,000 Add: purchases $550,000 less: returns at invoice price ($4,900) less:Discounts @3% on (550,000 - 4,900 =>545,100*3%) ($16,353) add: freight $9,000 cost of goods available for sale $639,747

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