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    JacquieSue's Avatar
    JacquieSue Posts: 2, Reputation: 1
    New Member
    		  
    #1

    Mar 14, 2007, 10:47 AM
    Accounting : Inventory Turnover
    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
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #2

    Mar 14, 2007, 01:03 PM
    Inventory Turnover = COGS / Average Inventory
    = 150,600 / (16,000+12,000)/2
    = 150,600 / (28,000/2)
    = 150,600 / 14,000
    = 10.757
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