During the year,The Mound Company purchased $1,920,000 of inventory.The cost of goods sold for the year was $1,800,000 and the ending inventory at December 31 was $360,000.What was the inventory turnover for the year?

Question

Quizplus · Accepted Answer

Inventory turnover is calculated as Cost of Goods Sold divided by Average Inventory. Average Inventory is calculated as (Beginning Inventory + Ending Inventory) / 2. Since the beginning inventory is not provided, we can deduce it using the formula: Beginning Inventory + Purchases - Cost of Goods Sold = Ending Inventory. Solving for Beginning Inventory gives us $240,000. Thus, Average Inventory = ($240,000 + $360,000) / 2 = $300,000. Inventory Turnover = $1,800,000 / $300,000 = 6.0.

During the Year,The Mound Company Purchased $1,920,000 of Inventory