Homework SourseComplete the following table Use 365 days in a year Round th
Solution
Case (a)
Begining inventory = $100
Purchases = $700
Cost of goods sold = $600
Ending inventory = ?
Cost of goods sold = Begining inventory + Purchases - Ending inventory
600 = 100 + 700 - Ending inventory
Ending inventory = $200
Average inventory = (Begining inventory + Ending inventory)/2
= (100 + 200)/2
= $150
Inventory turnover = Cost of goods sold/Average inventory
= 600/150
= 4 times
Days to sell = Number of days in a year/Inventory turnover
= 365/4
= 91.2 days
Case (b)
Begining inventory = $200
Purchases = ?
Cost of goods sold = $1,200
Ending inventory = ?
Inventory turnover = 6 times
Inventory turnover = Cost of goods sold/Average inventory
6 = 1,200/Average inventory
Average inventory = $200
Average inventory = (Begining inventory + Ending inventory)/2
200 = (200 + Ending inventory)/2
Ending inventory = 400 - 200
= $200
Cost of goods sold = Begining inventory + Purchases - Ending inventory
1,200 = 200 + Purchases - 200
Purchases = $1,200
Days to sell = Number of days in a year/Inventory turnover
= 365/6
= 60.8 days
Case (c)
Begining inventory = ?
Purchases = ?
Cost of goods sold = $1,000
Ending inventory = $150
Inventory turnover = ?
Days to sell = 36.5
Days to sell = Number of days in a year/Inventory turnover
36.5 = 365/Inventory turnover
Inventory turnover = 365/36.5
= 10 times
Inventory turnover = Cost of goods sold/Average inventory
10= 1,000/Average inventory
Average inventory = $100
Average inventory = (Begining inventory + Ending inventory)/2
100 = (Begining inventory + 150)/2
Begining inventory = 200 - 150
= $50
Cost of goods sold = Begining inventory + Purchases - Ending inventory
1,000 = 50 + Purchases - 150
Purchases = $1,100
| Case | BI | Purchases | CGS | EI | Inventory turnover | Days to sell |
| a | 100 | 700 | 600 | 200 | 4 | 91.2 |
| b | 200 | 1,200 | 1,200 | 200 | 6 | 60.8 |
| c | 50 | 1,100 | 1,000 | 150 | 10 | 36.5 |
