Asked by Jason Fraser on Jun 10, 2024
Verified
Harris Corporation, a retailer, had cost of goods sold of $290,000 last year. The beginning inventory balance was $26,000 and the ending inventory balance was $24,000. The corporation's inventory turnover was closest to:
A) 12.08
B) 11.60
C) 5.80
D) 11.15
Inventory Turnover
A financial ratio indicating how many times a company's inventory is sold and replaced over a period, illustrating the company's efficiency in managing and selling its stock.
Cost of Goods Sold
The immediate expenses related to producing the goods that a company sells, which involve both materials and labor.
Beginning Inventory
The cost of products on hand for selling at the commencement of an accounting cycle.
- Calculate and interpret inventory turnover and average sale period.
Verified Answer
Average inventory = (Beginning inventory + Ending inventory) / 2
Average inventory = ($26,000 + $24,000) / 2 = $25,000
Inventory turnover = $290,000 / $25,000 = 11.6
Therefore, the answer is B) 11.60.
Learning Objectives
- Calculate and interpret inventory turnover and average sale period.
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