Question

The 2016 financial statement of Willamette Valley Vineyards reported Net revenues of $19,425,412 and Cost of goods sold of $7,204,884. Note 3 to the financial statements reported that Inventories consisted of:

2016

2015

Winemaking and packaging materials

$ 817,836

$ 690,292

Work-in-progress

6,634,014

6,058,701

Finished goods

4,518,806

3,883,469

Total inventories

$11,970,656

$10,632,462


The inventory turnover for 2016 was:

Select one:

A. 0.57

B. 0.64

C. 0.59

D. 1.71

E. None of the above

Answer 1

Option B : 0.64

Step-by-step explanation:

Inventory Turnover 2016 = COGS÷ Average Inventory

Inventory Turnover 2016= 7,204,884 ÷ Average Inventory

Average Inventory = Opening Inventory + Closing Inventory

2

Average Inventory = 11,970,656 + 10,632,462

2

Average Inventory = 11,301,559

Inventory Turnover 2016 = 7204884 ÷ 11301559

Inventory Turnover 2016 = 0.64