Harker Company,a retailer,had cost of goods sold of $160,000 last year.The beginning inventory balance was $26,000 and the ending inventory balance was $20,000.The company's inventory turnover was closest to:

Question

Quizplus · Accepted Answer

Inventory turnover is calculated by dividing the cost of goods sold by the average inventory. To find the average inventory, we add the beginning and ending inventory balances and divide by 2:

Average inventory = (Beginning inventory + Ending inventory) / 2 = ($26,000 + $20,000) / 2 = $23,000

Inventory turnover = Cost of goods sold / Average inventory = $160,000 / $23,000 ≈ 6.96

Therefore, the closest inventory turnover is option C) 6.96 times.

Harker Company,a Retailer,had Cost of Goods Sold of $160,000 Last