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Selected data pertaining to Lore Co. for the calendar year 20X4 is as follows: Net cash sales $3,000 Cost of goods sold $18,000 Inventory at beginning of year $6,000 Purchases $24,000 Accounts receivable at beginning of year $20,000 Accounts receivable at end of year $22,000 What was the inventory turnover for 20X4?

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Answer:

The answer is: The inventory turnover for 20x4 was 2 times

Explanation:

In order to find the inventory turnover we must first calculate the ending inventory:

COGS = beginning inventory + purchases - ending inventory

$18,000 = $6,000 + $24,000 - ending inventory

ending inventory = $30,000 - $18,000 = $12,000

Inventory turnover = COGS / Average inventory

Average inventory = (beginning inventory + ending inventory) / 2

Inventory turnover = $18,000 / [($6,000 + $12,000) / 2] = $18,000 / $9,000

Inventory turnover = 2

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