With net sales of $40,000, beginning inventory at retail of $14,000, ending inventory at retail of $20,000, and cost of goods sold of $19,500, the inventory turnover at retail is (to the nearest hundredth):
A)5.15
B)3.25
C)2.35
D)5.23
E)None of these

Question

Quizplus · Accepted Answer

Inventory turnover at retail = Net Sales / Average Retail Inventory
Average Retail Inventory = (Beginning Inventory + Ending Inventory) / 2

Average retail inventory = ($14,000 + $20,000) / 2 = $17,000

Inventory turnover at retail = $40,000 / $17,000 = 2.35 (rounded to the nearest hundredth)

Therefore, the answer is (C) 2.35.

With Net Sales of $40,000, Beginning Inventory at Retail of $14,000