Question

During 2005, Rand Co. purchased $960,000 of inventory. The cost of goods sold for 2005 was $900,000, and the ending inventory on December 31, 2005 was $180,000. What was the inventory turnover for 2005?

Answer 1

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Step-by-step explanation:

Answer 2

Inventory turnover will be 6

Step-by-step explanation:

We have given purchased cost of inventory = $960000

Cost of goods sold = $900000

Ending inventory is given = $180000

Cost of goods available for sale = $900000+$180000 = $1080000

So beginning inventory = cost of goods available for sale - purchases = $1080000 - $960000 = $120000

So average inventory
`=(ending\ inventory+beginning\ inventory)/(2)`

`=(180000+120000)/(2)=150000`

We have to fond the inventory turnover

Inventory turnover is the ratio of cost of goods sold to average inventory

So inventory turnover
`=(900000)/(150000)=6`

So inventory turnover will be 6