A fire destroyed some of Powell Company's records. Information from the documents found related to inventory is listed below. Ending Inventory $76,000 Cost of Goods Sold 445,000 Consigned Goods 87,000 Beginning Inventory 43,000 What was the amount of inventory that was purchased during the year

The amount of inventory purchased during the year is $508,000.00 which is Closing Inventory + Cost of Goods Sold - Opening Inventory, i.e. $(76,000 + 445,000 - 43,000).  Alternatively, you can say it is the difference between Cost of goods available for sale minus Opening Inventory.

Explanation:

Cost of Goods Sold plus Closing Inventory equal Cost of goods available for sale.  Note that the consigned goods of $87,000 is already included in Cost of Goods Sold, so there is no need for adjusting our workings with the figure.  Remember that the P & L Accounts formula for Cost of Goods Sold is Opening Inventory + Purchases - Closing Inventory.  For this problem, we have to work backward from the Cost of Goods Sold in order to obtain the amount of inventory purchased during the year.

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