During the year just ended, the retailer James Corporation 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, then the inventory turnover for the year was:
A) 2.77
B) 2.57
C) 3.00
D) 2.62

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 = $175,000 + $425,000 - $450,000Ending inventory = $250,000Average inventory = ($175,000 + $250,000) / 2Average inventory = $212,500Inventory turnover = $450,000 / $212,500Inventory turnover = 2.77

During the Year Just Ended, the Retailer James Corporation Purchased