Homework Answers
Beginning inventory = $400,000
Inventory purchase = $1,900,000
Ending inventory = $500,000
Average inventory = (Beginning inventory + Ending inventory)/2
= (400,000 + 500,000)/2
= $450,000
Cost of goods sold = Beginning inventory + Inventory purchase - Ending inventory
= 400,000 + 1,900,000 - 500,000
= $1,800,000
Inventory turnover ratio = Cost of goods sold/Average inventory
= 1,800,000/450,000
= 4 times
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