During the current calendar year, Bowman Corporation purchased $660,000 of inventory. The beginning inventory balance was $84,000, and the inventory balance at year-end was $120,000. The inventory turnover for the current year was

Question

Quizplus · Accepted Answer

Inventory turnover is calculated by dividing the cost of goods sold (COGS) by the average inventory for a specific period.

COGS = Beginning inventory + Purchases - Ending Inventory

COGS = $84,000 + $660,000 - $120,000 = $624,000

Average inventory = (Beginning inventory + Ending inventory) / 2

Average inventory = ($84,000 + $120,000) / 2 = $102,000

Inventory turnover = COGS / Average inventory

Inventory turnover = $624,000 / $102,000 = 6.12 times

Therefore, the inventory turnover for the current year was 6.12 times. Choice C is the correct answer.

During the Current Calendar Year, Bowman Corporation Purchased $660,000 of Inventory