Guttery Corporation has provided the following financial data from its balance sheet:
Sales on account in Year 2 totaled $1,450,000 and cost of goods sold totaled $900,000.
-The company's inventory turnover for Year 2 is closest to:
A) 5.17
B) 5.56
C) 6.00
D) 0.86

Question

Guttery Corporation has provided the following financial data from its balance sheet:
  Sales on account in Year 2 totaled $1,450,000 and cost of goods sold totaled $900,000.
-The company's inventory turnover for Year 2 is closest to:
A) 5.17 
B) 5.56 
C) 6.00 
D) 0.86

Quizplus · Accepted Answer

Inventory turnover = Cost of goods sold ÷ Average inventory*
= $900,000 ÷ $162,000 = 5.56 (rounded)
*Average inventory =
($174,000 + $150,000) ÷ 2 = $162,000

Guttery Corporation Has Provided the Following Financial Data from Its