A company using the periodic inventory system has merchandise inventory costing $259 on hand at the beginning of a period. During the period, merchandise costing $695 is purchased. At year-end, merchandise inventory costing $109 is on hand. The cost of merchandise sold for the year is

Cost of merchandise sold $ 845

Explanation:

Beginning merchandise inventory $259

Add Purchased merchandise inventory $695

Cost of merchandise available for sale $ 954

Less Ending merchandise inventory  $109

Cost of merchandise sold $ 845

The periodic inventory system allocates the cost of goods sold at the end of the period. It also allocates the cost of goods available for sale between the cost of goods sold and ending inventory at the end of a period.

Therefore total amount is calculated.

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