signment 6 Help Save & Exit Check Exercise 6-13 Inventory turnover and days\' sa
ID: 2557167 • Letter: S
Question
signment 6 Help Save & Exit Check Exercise 6-13 Inventory turnover and days' sales in inventory LO A3 The following is information for Palmer Co. 2017 2016 Cost of goods sold $643,825 $426,650 $391,300 Ending inventory 97,40087,750 92,580 Use the above information to compute inventory turnover for 2017 and 2016. and its days sales in inventory at December 31, 2017 and 2016. )Use the above information to compute inventory turnover for 2016, and its days' sales in tory at December 31, 2016. Numerator Denominator Ratio Inventory turnover Days' sales in inventory b) Use the above information to compute inventory turnover for 2017, and its days sales in inventory at December 31, 2017 Numerator Denominator Ratio Inventory turnover Days sales in inventory ?|@ | ?Explanation / Answer
Inventory turnover
= Cost of goods sold / Average Inventory
Average Inventory
= (Opening Inventory + Closing Inventory) / 2
2016
= ($92,500 + $87,750) / 2
= $90,125
2017
= ($87,750 + $97,400) / 2
= $92,575
So, Inventory Turnover
2016
= $426,650 / $90,125
= 4.73 : 1
2017
= $643,825 / $92,575
= 6.95 : 1
Days’ sales in inventory
= 365 / Inventory turnover ratio
2016
= 365 / 4.73
= 77.17 days
2017
= 365 / 6.95
= 52.52 days
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