Chapter 7 Quz Question 6 (of 6) value 0.85 points M7-13 Calculating the Inventor

Question

Chapter 7 Quz Question 6 (of 6) value 0.85 points M7-13 Calculating the Inventory Turnover Ratio and Days to Sell [LO 7.5] Complete the following table. (Use 365 days in a year. Round the inventory turnover ratio to one decimal place before computing days to sell. Round days to sell to one decimal place.) Bl Purchases CGS El to Sell Turnover Ratio Days 1,180 $ 280 S 270 1.140 1,920 1,720 b. 9.6 C. 60 21.2 References Worksheet M7-13 and Days to Sell LO 7-5) Calculating the Inventory Turnover Ratio

Explanation / Answer

Average Inventory= Beginning Inventory + Ending inventory/2

Inventory Turnover Ratio= Cost of Goods Sold/ Average Inventory

Day to sell =No of days for period/ Inventory Turnover Ratio

Case 1: Ending inventory(EI) = Beginning Inventory (BI)+ Purchase - Cost of Goods Sold (CGS)

= 280 + 1180 - 1140 = 320

Average inventory = (BI+EI)/2

=(280+320)/2= 300

Inventory Turnover ratio = CGS/ Average Inventory

= 1140/300= 3.80

Days to Sell = 365/ Inventory Turnover ratio

= 365 / 3.8

= 96 Days

CASE 2=

Inventory Turnover ratio = CGS/ Average Inventory

9.6 = 1920 / (270 + EI)/2

270 + EI = 2 * (1920/9.6)

EI = 400 - 270 = 130

Days to Sell = 365/ Inventory Turnover ratio

= 365 / 9.6

= 38 Days

Purchase = Ending inventory(EI) - Beginning Inventory (BI)+ Cost of Goods Sold (CGS)

= 270 - 130 + 1920

= 2060

CASE 3 =

Days to Sell = 365/ Inventory Turnover ratio

21.2 = 365 / Inventory Turnover ratio

Inventory Turnover ratio = 17.2

Inventory Turnover ratio = CGS/ Average Inventory

17.2 = 1720 / (BI + 60)/2

BI + 60 = 2*(1720 / 17.2)

BI = 200 - 60

BI = 140

Purchase = Ending inventory(EI) - Beginning Inventory (BI)+ Cost of Goods Sold (CGS)

= 60 + 140 1720

= 1920

Case BI Purchases CGS EI Inventory Turnover Ratio Days to Sell a. 280 1180 1140 320 3.8 96 b. 270 1920 130 7.2 38 c. 140 1920 1,240 120 17.2 29.4

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.