During the year just ended,James Company purchased $425,000 of inventory.The inventory balance at the beginning of the year was $175,000.If the cost of goods sold for the year was $450,000,what was the inventory turnover for the year?

Question

Quizplus · Accepted Answer

The inventory turnover for the year can be calculated using the formula Turnover = Cost of Goods Sold/Average Inventory. In this case, the cost of goods sold was $450,000 and the average inventory was [(Beginning Inventory + Ending Inventory)/2], which is [(175,000 + 425,000)/2] = $300,000. Therefore, the inventory turnover is $450,000/$300,000 = 2.77 times, which is option C.

During the Year Just Ended,James Company Purchased $425,000 of Inventory