Excerpts from Sydner Corporation's most recent balance sheet appear below:
Sales on account in Year 2 amounted to $1,390 and the cost of goods sold was $900.
-The inventory turnover for Year 2 is closest to:
A) 3.75
B) 1.20
C) 4.09
D) 0.83

Question

Excerpts from Sydner Corporation's most recent balance sheet appear below:
  Sales on account in Year 2 amounted to $1,390 and the cost of goods sold was $900.
-The inventory turnover for Year 2 is closest to:
A) 3.75 
B) 1.20 
C) 4.09 
D) 0.83

Quizplus · Accepted Answer

Inventory turnover = Cost of goods sold ÷ Average inventory balance
= $900 ÷ $220* = 4.09 (rounded)
*Average inventory balance = ($240 + $200) ÷ 2 = $220

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