Question

Palamino Corporation had beginning inventory of $30,000 and ending inventory of $38,000. Its net sales were $172,000 and net purchases were $93,000. Cost of goods sold for the period was $85,000. What is Palamino​'s rate of inventory​ turnover?

Answer 1

2.5 Times

Step-by-step explanation:

Calculation for Palamino'ss rate of inventory​ turnover

Using this formula

Rate of Inventory turnover = Cost of Goods sold / Average inventory

First step is to find the Average inventory using this formula

Let plug in the formula

Average inventory = (Beginning inventory + Ending inventory )/2

Average inventory= (30,000+38,000)/2

Average inventory=68,000/2

Average inventory= $34,000

Now let calculate the rate of Inventory turnover using this formula

Rate of Inventory turnover = Cost of Goods sold / Average inventory

Let plug in the formula

Rate Inventory turnover = 85,000 / 34,000

Rate of Inventory turnover = 2.5Times

Therefore Palamino'ss rate of inventory​ turnover will be 2.5Times