Buying merchandise under the periodic inventory system

Transaction

A store’s Inventory account still shows $18,000.00, the value of the goods counted at the end of last year. In March it buys merchandise for resale on account for $4,500.00; the goods go straight into its stockroom. Goods bought for resale are exempt from sales tax.

Assumptions: This store uses the periodic inventory system: purchases are recorded in a Purchases account, and Inventory is updated only after the year-end count.