Please check my answer:


Cost of merchandise sold 12/31/05 $ 172,900 12/31/06 $150,600
Inventory 12/31/05 16,000 12/31/06 12,000


Based on the above information compute the inventory turnover.

The problem is - the instructions do not say to average the cost of mdse.sold. My book does not show this either. Would this be correct?

16,000+12,000=28,000/2=14,000

172,9000+150,600=323,500/2=161,750

161,750/14000=11.6

I also did this without averaging the cost of mdse. Sold.

150,600/14000=10.8

Inventory Turnover = COGS / Average Inventory
= 150,600 / (16,000+12,000)/2
= 150,600 / (28,000/2)
= 150,600 / 14,000
= 10.757