(a) Inventory turnover ratio = Cost of the goods sold / Average inventory
where, Average inventory = Beginning inventory + Ending inventory / 2
For 2016:
Ending inventory = $94250, Beginning inventory = Ending inventory of 2015 = $99000
Average inventory = ($99000 + $94250) / 2 = $193250 / 2 = $96625
Cost of the goods sold = $351650
Putting these values in the inventory turnover ratio formula, we get,
Inventory turnover ratio = $351650 / $96625 = 3.64
Days' sales in inventory = 365 / Inventory turnover ratio
For 2016
Inventory turnover ratio = 3.64 times ( as calculated above)
Putting these values in the Days' sales in inventory ratio formula, we get,
Days' sales in inventory ratio = 365 / 3.64 = 100.27 days
(b) Inventory turnover ratio = Cost of the goods sold / Average inventory
For 2017:
Ending inventory = $103900, Beginning inventory = Ending inventory of 2016 = $94250
Average inventory = ($94250 + $103900) / 2 = $198150 / 2 = $99075
Cost of the goods sold = $568825
Putting these values in the inventory turnover ratio formula, we get,
Inventory turnover ratio = $568825 / $99075 = 5.74
Days' sales in inventory = 365 / Inventory turnover ratio
For 2017
Inventory turnover ratio = 5.74 times ( as calculated above)
Putting these values in the Days' sales in inventory ratio formula, we get,
Days' sales in inventory ratio = 365 / 5.74 = 63.59 days
mnment Exercise 5-13 Inventory turnover and days' soles in inventory LO AS The following is information...
Exercise 5-13 Inventory turnover and days' sales in inventory LO A3 The following is Information for Palmer Co. Cost of goods sold Ending inventory $ 643,825 97,422 2016 $426,650 87,750 2015 $ 391,300 92,500 Use the above Information to compute Inventory turnover for 2017 and 2016, and its days' sales In Inventory at December 31, 2017 and 2016. % Answer is not complete. (a) Use the above information to compute inventory turnover for 2016, and its days' sales in inventory...
OBLEMS - CHAPTER 5 6 Help The following is information for Palmer Co. Cost of goods sold Ending inventory Year 3 $623, 825 98,400 Year 2 $406,650 88,750 Year 1 $371,300 93,500 Use the above information to compute inventory turnover for Year 3 and Year 2, and its days' sales in inventory at December 31, Year 3 and Year 2 (a) Use the above information to compute Inventory turnover for Year 2, and its days' sales in Inventory at December...
Chapter 05 Homework i Saved The following is information for Palmer Co. Cost of goods sold Ending inventory Year 3 $638,825 96,900 Year 2 $ 421,650 87,250 Year 1 $386,300 92,000 points Use the above information to compute inventory turnover for year 3 and year 2, and its days' sales in inventory at December 31, year 3 and year 2. eBook Hint Print (a) Use the above information to compute inventory turnover for year 2, and its days' sales in...
Required information Exercise 13-8 Liquidity analysis and interpretation LO P3 (The following information applies to the questions displayed below.) Simon Company's year-end balance sheets follow. 2017 2016 2015 At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Accounts payable Long-term notes payable secured by mortgages on plant assets Common stock, $10 par value Retained earnings Total liabilities and equity $ 27,733 $ 32,418 $ 32,457 89,500 63,000 52,300 114,000...
Required information Exercise 13-8 Liquidity analysis and interpretation LO P3 [The following information applies to the questions displayed below.] Simon Companyâ€s year-end balance sheets follow. At December 31 2017 2016 2015 Assets Cash $ 26,619 $ 31,115 $ 32,412 Accounts receivable, net 89,000 62,100 53,200 Merchandise inventory 114,500 83,000 57,000 Prepaid expenses 8,572 8,168 3,601 Plant assets, net 217,041 208,489 184,487 Total assets $ 455,732 $ 392,872 $ 330,700 Liabilities and Equity Accounts payable $ 112,342 $ 65,731 $ 43,216...
Required information Exercise 13-8 Liquidity analysis and interpretation LO P3 [The following information applies to the questions displayed below.) Simon Company's year-end balance sheets follow. 2017 2016 2015 At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Accounts payable Long-term notes payable secured by mortgages on plant assets Common stock, $10 par value Retained earnings Total liabilities and equity $ 32,230 $ 37,673 $ 39,243 89,400 62,800 50, 100...
Required information Part 2 of 4 Exercise 13-8 Liquidity analysis and interpretation LO P3 [The following information applies to the questions displayed below.] Simon Company's year-end balance sheets follow. points At December 31 Assets 2017 2015 2016 $ 33,579 $ 39,250 $ 40,076 57,400 58,000 4,453 240,871 Cash 89,000 112,000 10,813 Accounts receivable, net Merchandise inventory Prepaid expenses 63,000 83,500 10,303 eBook 318,101 289,717 Plant assets, net $ 563,493 $ 485,770 $ 400,800 Total assets Hint Liabilities and Equity $...
Cost of goods sold Ending inventory Year 3 $593,825 101,400 Year 2 $376,650 91,750 Year 1 $341,300 96,500 Use the above information to compute inventory turnover for Year 3 and Year 2, and its days' sales in inventory at December 31, Year 3 and Year 2 (a) Use the above information to compute inventory turnover for Year 2, and its days' sales in inventory at December 31, Year 2. Numerator 1 Denominator = Ratio Inventory turnover Days' sales in inventory...
Exercise 17-8 Liquidity analysis and interpretation LO P3 [The following information applies to the questions displayed below.j Simon Company's year-end balance sheets follovw At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets 2017 $ 31,800 35,625 $37,800 50,200 54,000 5,000 278, 500 255,000 230,500 $523,000 $445,000 377,500 89,500 62,500 112,500 82,500 9,375 10,700 Liabilities and Equity Accounts payable Long-term notes payable secured by $129,900 75,250 $ 51,250 mortgages on plant assets Common...
The following is information for Palmer Co. 2017 2016 2015 Cost of goods sold $ 543,825 $ 326,650 $ 291,300 Ending inventory 106,400 96,750 101,500 Use the above information to compute inventory turnover for 2017 and 2016, and its days' sales in inventory at December 31, 2017 and 2016.