qs 5-27 (algo) analyzing inventory lo a3\nendor company begins the year with $60,000 of goods in inventory…

qs 5-27 (algo) analyzing inventory lo a3\nendor company begins the year with $60,000 of goods in inventory. at year - end, the amount in inventory has increased to $77,000. cost of goods sold for the year is $1,700,000.\ncompute endors inventory turnover and days sales in inventory. assume there are 365 days in the year.\ninventory turnover\nchoose numerator: / choose denominator: = inventory turnover\ncost of goods sold / average inventory = inventory turnover\n$ 1,700,000 / $ 68,500 = 24.82 times\ndays sales in inventory\nchoose numerator: / choose denominator: × days = days sales in inventory\n/ cost of goods sold × 365 = days sales in inventory\n/ $ 1,700,000 × 365 = days

qs 5-27 (algo) analyzing inventory lo a3\nendor company begins the year with $60,000 of goods in inventory. at year - end, the amount in inventory has increased to $77,000. cost of goods sold for the year is $1,700,000.\ncompute endors inventory turnover and days sales in inventory. assume there are 365 days in the year.\ninventory turnover\nchoose numerator: / choose denominator: = inventory turnover\ncost of goods sold / average inventory = inventory turnover\n$ 1,700,000 / $ 68,500 = 24.82 times\ndays sales in inventory\nchoose numerator: / choose denominator: × days = days sales in inventory\n/ cost of goods sold × 365 = days sales in inventory\n/ $ 1,700,000 × 365 = days

Answer

Explanation:

Step1: Calculate average inventory

Average inventory = $\frac{Beginning\ inventory + Ending\ inventory}{2}=\frac{60000 + 77000}{2}=$68500$

Step2: Calculate inventory turnover

Inventory turnover = $\frac{Cost\ of\ goods\ sold}{Average\ inventory}=\frac{1700000}{68500}\approx24.82$ times

Step3: Calculate days' sales in inventory

Days' sales in inventory = $\frac{365}{Inventory\ turnover}=\frac{365}{24.82}\approx14.71$ days

Answer:

Inventory turnover: 24.82 times Days' sales in inventory: 14.71 days