The following data were extracted from the income statement of Martin Solutions, Inc.: Year 2 Year...

The following data were extracted from the income statement of Martin Solutions, Inc.:

	Year 2	Year 1
Sales	$1,139,600	$1,192,320
Beginning inventory	80,000	64,000
Cost of goods sold	500,800	606,000
Ending inventory	72,000	80,000

Required:

Assume a 365-day year.

Determine for each year:

a. Inventory turnover. Round your answers to one decimal place.

Year 2
Year 1

b. Number of days' sales in inventory. Round your final answer to one decimal place.

Year 2	days
Year 1	days

Expert Solution

a.	Inventory Turnover
	Year 2	7.0	times
	Year 1	7.6	times

b.	Day's sales in Inventory
	Year 2	52.5	Days
	Year 1	48.2	Days

a.	Inventory Turnover
		Choose Numerator	/	Choose Denominator	=	Inventory Turnover
		Cost of goods sold	/	Average Inventory	=	Inventory Turnover
	Year 2	$ 5,00,800	/	$ 72,000	=	7.0	times
	Year 1	$ 6,06,000	/	$ 80,000	=	7.6	times

		Workings:
				Year 2	Year 1
		Beginning Inventory	=	$ 80,000	$ 64,000
		Ending Inventory	=	$ 72,000	$ 80,000
	(i)	Total	=	$ 1,52,000	$ 1,44,000
	(i) / 2	Average Inventory	=	$ 76,000	$ 72,000

b.	Day's sales in Inventory
		Choose Numerator	/	Choose Denominator	X	Days	=	Day's sales in Inventory
		Ending Inventory	/	Cost of goods sold	X	365	=	Day's sales in Inventory
	Year 2	$ 72,000	/	$ 5,00,800	X	365	=	52.5	Days
	Year 1	$ 80,000	/	$ 6,06,000	X	365	=	48.2	Days

ekkarill92 answered 9 months ago

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The following data were extracted from the income statement of Martin Solutions, Inc.: Year 2 Year...

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