A company reports the following amounts for 2012: $$\begin{array} { l r }
\text { Inventory (beginning) } & \$ 20,000 \
\text { Inventory (ending) } & 30,000 \
\text { Purchases } & 160,000 \
\text { Purchase returns } & 10,000
\end{array}$$ Calculate cost of goods sold, the inventory turnover ratio, and the average days in inventory for 2012.

Question

A company reports the following amounts for 2012: $$\begin{array} { l r } 
\text { Inventory (beginning) } & \$ 20,000 \
\text { Inventory (ending) } & 30,000 \
\text { Purchases } & 160,000 \
\text { Purchase returns } & 10,000
\end{array}$$ Calculate cost of goods sold, the inventory turnover ratio, and the average days in inventory for 2012.

Quizplus · Accepted Answer

Cost of goods sold = $20,000 + $160,000 - $10,000 - $30,000 = $140,000.
Inventory turnover ratio = $140,000/[($20,000 + $30,000)/2] = 5.6 times.
Average days in inventory = 365/5.6 = 65.2 days.

A Company Reports the Following Amounts for 2012 Calculate Cost of Goods Sold, the Inventory Turnover Ratio, and l