Excerpts from Colter Corporation's most recent balance sheet appear below:
Sales on account in Year 2 amounted to $1,210 and the cost of goods sold was $720.
-The inventory turnover for Year 2 is closest to:
A) 1.06
B) 0.94
C) 4.36
D) 4.24

Question

Excerpts from Colter Corporation's most recent balance sheet appear below:
  Sales on account in Year 2 amounted to $1,210 and the cost of goods sold was $720.
-The inventory turnover for Year 2 is closest to:
A) 1.06 
B) 0.94 
C) 4.36 
D) 4.24

Quizplus · Accepted Answer

Inventory turnover = Cost of goods sold ÷ Average inventory balance
= $720 ÷ $165* = 4.36 (rounded)
*Average inventory balance = ($170 + $160) ÷ 2 = $165

Excerpts from Colter Corporation's Most Recent Balance Sheet Appear Below