Dillard’s, Inc., operates department stores located primarily in the Southwest, Southeast, and Midwest. In its 2016 third-quarter report, the company reported Cost of Goods Sold of $880 million, ending inventory for the third quarter of $1,900 million, and ending inventory for the previous quarter of $1,500 million. Estimate merchandise purchases for the third quarter.

$1,280 million

Explanation:

The change between the opening inventory balance and the ending inventory balance for a period is as a result of the purchases of inventory and the sale of inventory during the period.

All of these elements are related as;

Opening inventory + purchases - cost of goods sold = ending inventory

As such, to estimate the merchandise inventory purchased,

let the purchase for the period be T

1500 + T - 880 = 1900 (All amounts in millions of $)

T = 1900 + 880 - 1500

= 1280

The merchandise purchases for the third quarter is $1,280 million.