Block Food’s, a retail grocery store, has agreed to purchase all of its merchandise from Square Wholesalers. In return, Block receives a special discount on purchases. Over recent months, Square noticed that purchases by Block had been falling off. At first, Square simply thought that business might be down for Block and was hopeful that their purchases would pick up. When business with Block did not return to a normal level, Square requested financial statements from Block. Square’s records indicate that Block purchased $300,000 worth of merchandise during 20-1, the most recent year.

Selected information taken from Block’s financial statements is as follows:

Balance Sheet .. 12/31/-1 . 12/31/-0

Inventory .. $30,000 .. $20,000

Income Statement

Cost of goods sold ...... $400,000

REQUIRED

Compute net purchases made by Block during 20-1. Does it appear that Block violated the agreement?