BE6-7 Determine the LCM valuation using inventory categories . Central Appliance
ID: 341402 • Letter: B
Question
BE6-7
Determine the LCM valuation using inventory categories.
Central Appliance Center accumulates the following cost and market data at December 31.
Compute the lower-of-cost-or-market for the company's total inventory.
BE6-8
Compute inventory turnover and days in inventory.
At December 31, 2017, the following information was available for A. Kamble Com pany: ending inventory $40,000, beginning inventory $60,000, cost of goods sold $270,000, and sales revenue $380,000. Calculate inventory turnover and days in inventory for A. Kamble Company.
Explanation / Answer
Cost and market data not provided for BE6-7, therefore not possible to provide solution of this question. Solution to BE6-8 provided below:
Solution BE 6-8:
Ending inventory = $40,000
Beginning inventory = $60,000
Average inventory = (Begining Inventory + Ending Inventory)/2 = ($60,000 + $40,000)/2 = $50,000
Cost of goods sold = $270,000
Inventory Turnover = Cost of goods sold / Average inventory = $270,000 / $50,000 = 5.4 times
Day in inventory = Nos of days in a year / Inventory Turnover = 365 / 5.4 = 67.59 days
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