Assuming the Use of the Periodic Inventory System,use the Data

question 178

Essay

Assuming the use of the periodic inventory system,use the data below to calculate the net cost of purchases and the goods available for sale for the year ended December 31,2010.
$\begin{array}{llr} \text { Merchandise Inventory, December 31, 2009 } &\$2,307\\ \text { Merchandise Inventory, December 31, 2010} &2,041\\ \text { Cost of Goods Sold } &7,604\end{array}$

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Definitions:

Income Effect

The change in an individual’s or economy’s income and how that change affects the quantity demanded of a good or service.

Hourly Wage

The amount of money paid for each hour of work, often set by an employer or by legal minimum wage laws.

Substitution Effect

The economic principle that as prices rise or income decreases, consumers will replace more expensive items with less costly alternatives.

Income Effect

Variations in the income of an individual or an economy and the subsequent effects on the demand for goods or services.