In 2011 Borger Inc.had beginning inventory of $106,000, purchases of $1,126,500, ending inventory of $116,000, accounts payable of $49,605, and sales of $2,147,250.Inventory turnover for 2011 was closest to:
A)9.625
B)10.06
C)10.15
D)10.53

Question

Quizplus · Accepted Answer

Inventory turnover is calculated as Cost of Goods Sold (COGS) divided by Average Inventory. COGS is calculated as Beginning Inventory + Purchases - Ending Inventory. For Borger Inc., COGS = $106,000 + $1,126,500 - $116,000 = $1,116,500. Average Inventory = ($106,000 + $116,000) / 2 = $111,000. Therefore, Inventory Turnover = $1,116,500 / $111,000 ≈ 10.06.