Use the following information for Shafer Company to compute inventory turnover for year 2. $$\begin{array} { | l | r | r | }
\hline & \text { Year 2 } & \text { Year 1 } \
\hline \text { Net sales } & \$ 647,500 & \$ 582,000 \
\hline \text { Cost of goods sold } & 389,500 & 360,840 \
\hline \text { Ending inventory } & 76,700 & 79,380 \
\hline
\end{array}$$
A) 8.44
B) 9.98
C) 5.08
D) 4.99
E) 8.30

Question

Use the following information for Shafer Company to compute inventory turnover for year 2. $$\begin{array} { | l | r | r | } 
\hline & \text { Year 2 } & \text { Year 1 } \
\hline \text { Net sales } & \$ 647,500 & \$ 582,000 \
\hline \text { Cost of goods sold } & 389,500 & 360,840 \
\hline \text { Ending inventory } & 76,700 & 79,380 \
\hline
\end{array}$$
A) 8.44
B) 9.98
C) 5.08
D) 4.99
E) 8.30

Quizplus · Accepted Answer

Inventory turnover is calculated as Cost of Goods Sold divided by Average Inventory. Average Inventory for Year 2 is (76,700 + 79,380) / 2 = 78,040. Inventory Turnover = 389,500 / 78,040 = 4.99.

Use the Following Information for Shafer Company to Compute Inventory