Question
In: Accounting
Early in 2022, Blossom Company switched to a just-in-time inventory system. Its sales and inventory amounts...
Early in 2022, Blossom Company switched to a just-in-time
inventory system. Its sales and inventory amounts for 2021 and 2022
are shown below.
|
2021 |
2022 |
|||
|---|---|---|---|---|
|
Sales revenue |
$3,450,000 | $3,900,000 | ||
|
Cost of goods sold |
1,292,000 | 1,858,500 | ||
|
Beginning inventory |
155,000 | 225,000 | ||
|
Ending inventory |
225,000 | 90,000 |
Determine the inventory turnover for 2021 and 2022.
(Round answers to 1 decimal place, e.g.
5.1.)
|
2021 |
2022 |
|||||
|---|---|---|---|---|---|---|
|
Inventory turnover |
||||||
Determine the days in inventory for 2021 and 2022.
(Round answers to 1 decimal place, e.g.
5.1.)
|
2021 |
2022 |
|||||
|---|---|---|---|---|---|---|
|
Days in inventory |
||||||
Solutions
Expert Solution
Inventory turnover or Inventory turnover ratio is the number of times a company has sold and replaced its inventory during a given period. It is calculated as :
Inventory Turnover = Cost of Goods Sold / Average Inventory
where,
Average Inventory = (Beginning Inventory + Ending Inventory) / 2
Compuation of Inventory Turnover for 2021 and 2022
Inventory Turnover 2021 = Cost of Goods Sold / Average
Inventory
= 1,292,000 / [ ( 155,000 + 225,000) / 2 ]
= 1,292,000 / 190,000
= 6.8
Inventory Turnover 2022 = Cost of Goods Sold / Average
Inventory
= 1,858,500 / [ ( 225,000 + 90,000 ) / 2 ]
= 1,858,500 / 157,500
= 11.8
Computation of Days in Inventory for 2021 and 2022
Days in inventory refers to number of days it takes for inventory to turn into sales.
Days in Inventory 2021 = 365 / Inventory turnvover = 365 / 6.8 =
53.68
days
Days in Inventory 2022 = 365 / Inventory Turnover = 365 / 11.8 =
30.93
days
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Units
Unit Cost
Total Cost
April 1 inventory
300
$33
$ 9,900
April 15 purchase
440
40
17,600
April 23 purchase
260
43
11,180
1,000
$38,680
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$enter a dollar amount
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Blossom Company uses a periodic inventory system. For April, when the company sold 550 units, the...
Blossom Company uses a periodic inventory system. For April,
when the company sold 550 units, the following information is
available.
Units
Unit Cost
Total Cost
April 1 inventory
300
$33
$ 9,900
April 15 purchase
440
40
17,600
April 23 purchase
260
43
11,180
1,000
$38,680
Compute the April 30 inventory and the April cost of goods sold
using the FIFO method.
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$enter a dollar amount
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Blossom Company uses a periodic inventory system. For April, when the company sold 550 units, the...
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when the company sold 550 units, the following information is
available.
April 1 inventory
300
$33
$ 9,900
April 15 purchase
440
40
17,600
April 23 purchase
260
43
11,180
1,000
$38,680
Compute the April 30 inventory and the April cost of goods sold
using the LIFO method.
Ending Inventory $
Cost of goods sold $
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4.
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