Question

What’s the answer to this question for accounting?

Answer 1

• The inventory turnover for the year is 10 .

Step-by-step explanation:

The inventory turn over for a year is the number of times the inventory has been sold over the year:

`\text{Inventory turn over }=\frac{\text{Cost of goods sold}}{\text{Average inventory}}`

The average inventory is:

`\text{Average inventory }=\frac{\text{Beginning inventory + Ending inventory}}{2}`

Thus, from the financial data in the table for The Tampa Manufacturing Company, at Decermber 31, the inventory turnover for the year is:

`\text{Average inventory }=\frac{\text{\$ 55,000 + \$ 45,000}}{2}=\$ 50,000`

`\text{Inventory turn over }=\frac{\text{\$500,000}}{\text{\$50,000}}=10`