ments 355039 Kimmel, Financial Accounting, Be Help 1 Sstem Aonouncements BACK Ex

Question

ments 355039 Kimmel, Financial Accounting, Be Help 1 Sstem Aonouncements BACK Exercise 6-11 (Part Level Submission) Suppose this information is available for PepsiCo, Inc. for 2015, 2016, and 2017 (in Beginning inventory Ending inventory Cost of goods sold 2015 2016 2017 $2,000 $2,400 $2,600 2,400 2,600 2,700 17,738 20,209 20,394 39,30743,07343,959 (al) Your answer is correct. Calculate the inventory turnover for PepsiCo, Inc. for 2015, 2016, and 2017. (Round inventory turnover to 1 decimal place, e.g. 5.1.) 2015 016 2017 Inventory turnover 81 times n. time Attempts: 2 of 5 used (a2) Your answer is incorrect. Try again. Calculate the days in inventory for PepsiCo, Inc. for 2015, 2016, and 2017. (Round days in inventory to 1 decimal place, e.g. s.1.) 65 days Days in inventory

Explanation / Answer

SOLUTION

(1) Inventory turnover ratio = Cost of goods sold / Average inventory

Average inventory = (Beginning inventory + Ending Inventory) / 2

2015-

Average inventory = ($2,000 + $2,400) / 2 = $2,200

Inventory turnover ratio = $17,738 / $2,200 = 8.1 times

2016-

Average inventory = ($2,400 + $2,600) / 2 = $2,500

Inventory turnover ratio = $20,209 / $2,500 = 8.1 times

2017-

Average inventory = ($2,600 + $2,700) / 2 = $2,650

Inventory turnover ratio = $20,394 / $2,650 = 7.7 times

(2) Days in inventory = 365/ Inventory turnover ratio

2015- 365/ 8.1 times = 45.1 days

2016- 365/ 8.1 times = 45.1 days

2017- 365/ 7.7 times = 47.4 days

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