Able Company began the year with a balance in inventory of $110,000 and ended the year with a balance of $102,000.The net sales for the year were $983,000 with a gross profit on sales of $295,000.What was the inventory turnover?
A)2.78 times
B)2.89 times
C)6.49 times
D)9.27 times

Question

Quizplus · Accepted Answer

Inventory turnover = Cost of goods sold / Average inventory

Cost of goods sold = Net sales - Gross profit on sales 
= $983,000 - $295,000 
= $688,000

Average inventory = (Beginning inventory + Ending inventory) / 2 
= ($110,000 + $102,000) / 2 
= $106,000

Inventory turnover = $688,000 / $106,000 
= 6.49 times

Therefore, the answer is C) 6.49 times.

Able Company Began the Year with a Balance in Inventory