During the year just ended, the retailer James Corporation purchased $430,000 of inventory. The inventory balance at the beginning of the year was $181,000. If the cost of goods sold for the year was $455,000, then the inventory turnover for the year was:
A) 2.70
B) 2.51
C) 2.92
D) 2.55

Question

Quizplus · Accepted Answer

Inventory turnover = Cost of goods sold / Average inventoryAverage inventory = (Beginning inventory + Ending inventory) / 2Ending inventory = Beginning inventory + Purchases - Cost of goods soldEnding inventory = $181,000 + $430,000 - $455,000 = $156,000Average inventory = ($181,000 + $156,000) / 2 = $168,500Inventory turnover = $455,000 / $168,500 = 2.70

During the Year Just Ended, the Retailer James Corporation Purchased