Bundle: Financial & Managerial Accounting, 14th + Working Papers for Warren/Reeve/Duchac's Corporate Financial Accounting, 14th + Working Papers, ... & Managerial Accounting, 14th + CengageNOWv2,
14th Edition
ISBN: 9781337804011
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 6, Problem 3ADM
(a)
To determine
Inventory turnover ratio: Inventory turnover ratio is used to determine the number of times inventory used or sold during the particular accounting period. The formula to calculate the inventory turnover ratio is as follows:
Days’ sales in inventory: Days’ sales in inventory are used to determine number of days a particular company takes to make sales of the inventory available with them. The formula to calculate the days’ sales in inventory ratio is as follows:
To determine: the inventory turnover for Company MB and Company BF.
(b)
To determine
the Days’ sales in inventory ratio Company MB and Company BF.
(c)
To determine
To explain: the difference in inventory efficiency between two companies.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
PepsiCo, Inc., manufacturer and distributor of drinks, Frito-Lay, and Quaker Foods, provides the fol-lowing in a recent annual report (shown here in $ billions). Determine PepsiCo’s turnover.
Net revenue $32.5Cost of goods sold $14.2Inventory:Raw material inventory $.74Work-in-process inventory $.11Finished goods inventory $.84Total average inventory investment $1.69
APPROACH c Use the inventory turnover computation in Equation (11-2) to measure inventoryperformance. Cost of goods sold is $14.2 billion. Total inventory is the sum of raw material at $.74 billion,
work-in-process at $.11 billion, and finished goods at $.84 billion, for total average inventory invest-ment of $1.69 billion.
The financial data for Crane's Fresh Fruits Incorporated and Cullumber's Supermarket Ltd. for the current year are as follows:
Crane's Fresh Fruits
Cullumber's Supermarket
(a)
Annual Cost
of Goods
Sold
$9,724,440
Inventory turnover
53,026,340
Inventory
Jan. 1
$64 100
4,512,200
Crane's Fresh Fruits
Inventory
Dec. 31
Calculate the inventory turnover for each company. (Round answers to 1 decimal place, e.g. 18.4.)
times
$756,100
1,128,900
Cullumber's Supermarket
times
Cost of goods sold for Califant Industries was $949,420 for the year. If the beginning inventory at cost was $609,700 and the ending inventory at cost was $416,200, find the inventory turnover at cost. (Round your answer to the nearest tenth.)
a. 1.9 times
b. 2.0 times
c. 2.4 times
d. 3.2 times
Chapter 6 Solutions
Bundle: Financial & Managerial Accounting, 14th + Working Papers for Warren/Reeve/Duchac's Corporate Financial Accounting, 14th + Working Papers, ... & Managerial Accounting, 14th + CengageNOWv2,
Ch. 6 - Before inventory purchases are recorded, the...Ch. 6 - Why is it important to periodically take a...Ch. 6 - Do the terms FIFO, LIFO, and weighted average...Ch. 6 - If inventory is being valued at cost and the price...Ch. 6 - Which of the three methods of inventory...Ch. 6 - If inventory is being valued at cost and the price...Ch. 6 - Using the following data, how should the inventory...Ch. 6 - Prob. 8DQCh. 6 - Hutch Co. sold merchandise to Bibbins Company on...Ch. 6 - A manufacturer shipped merchandise to a retailer...
Ch. 6 - Cost flow methods The following three identical...Ch. 6 - Perpetual inventory using FIFO Beginning...Ch. 6 - Perpetual inventory using LIFO Beginning...Ch. 6 - Perpetual inventory using weighted average...Ch. 6 - Periodic inventory using FIFO, UFO, and weighted...Ch. 6 - Lower-of-cost-or-market method On the basis of the...Ch. 6 - Effect of inventory errors During the taking of...Ch. 6 - Control of inventories Triple Creek Hardware Store...Ch. 6 - Prob. 6.2EXCh. 6 - Perpetual inventory using FIFO Beginning...Ch. 6 - Perpetual inventory using LIFO Assume that the...Ch. 6 - Perpetual inventory using LIFO Beginning...Ch. 6 - Prob. 6.6EXCh. 6 - FIFO and UFO costs under perpetual inventory...Ch. 6 - Weighted average cost flow method under perpetual...Ch. 6 - Weighted average cost flow method under perpetual...Ch. 6 - Prob. 6.10EXCh. 6 - Perpetual inventory using LIFO Assume that the...Ch. 6 - Periodic inventory by three methods The units of...Ch. 6 - Periodic inventory by three methods; cost of goods...Ch. 6 - Comparing inventory methods Assume that a firm...Ch. 6 - Lower-of-cost-or-market inventory On the basis of...Ch. 6 - Prob. 6.16EXCh. 6 - Effect of errors n physical inventory Madison...Ch. 6 - Effect of errors in physical inventory Fonda...Ch. 6 - Prob. 6.19EXCh. 6 - Prob. 6.20EXCh. 6 - Retail method A business using the retail method...Ch. 6 - Retail method A business using the retail method...Ch. 6 - Retail method On the basis of the following data,...Ch. 6 - Gross profit method The inventory was destroyed by...Ch. 6 - Prob. 6.25EXCh. 6 - Gross profit method Based on the following data,...Ch. 6 - FIFO perpetual inventory The beginning inventory...Ch. 6 - LIFO perpetual inventory The beginning inventory...Ch. 6 - Weighted average cost method with perpetual...Ch. 6 - Periodic inventory by three methods The beginning...Ch. 6 - Periodic inventory by three methods Dymac...Ch. 6 - Lower-of-cost-or-market inventory Data on the...Ch. 6 - Retail method; gross profit method Selected data...Ch. 6 - FIFO perpetual inventory The beginning inventory...Ch. 6 - LIFO perpetual inventory The beginning inventory...Ch. 6 - Weighted average cost method with perpetual...Ch. 6 - Periodic inventory by three methods The beginning...Ch. 6 - Prob. 6.5BPRCh. 6 - Lower-of-cost-or-market inventory Data on the...Ch. 6 - Prob. 6.7BPRCh. 6 - Prob. 1ADMCh. 6 - Costco, Walmart, Nordstrom: Inventory turnover and...Ch. 6 - Prob. 3ADMCh. 6 - Hewlett-Packard and Apple: Inventory turnover and...Ch. 6 - Prob. 6.1TIFCh. 6 - Communication Golden Eagle Company began...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Shaquille Corporation began the current year with inventory of 50,000. During the year, its purchases totaled 110,000. Shaquille paid freight charges of 8,500 for those purchases. At the end of the year, Shaquille had inventory of 47,800. Prepare a schedule to determine Shaquille's cost of goods sold for the current year.arrow_forwardEndor Company begins the year with $110,000 of goods in inventory. At year-end, the amount in inventory has increased to $121,000. Cost of goods sold for the year is $1,500,000. Compute Endor's inventory turnover and days' sales in inventory. Assume there are 365 days in the year. Inventory Turnover Choose Numerator: 1 Choose Denominator: 1 1 Choose Numerator: Days' Sales in Inventory 1 Choose Denominator: X 1 X 1 X Days 365 365 Inventory Turnover Inventory Turnover times = = = Days' Sales in Inventory Days' sales in inventory daysarrow_forwardCost of goods sold for Abe Distributors was $550,330 for the year. If the beginning inventory at cost was $118,700 and the ending inventory at cost was $303,400, find the inventory turnover at cost. (Round your answer to the nearest tenth.) a. 2.6 b. 2.7 c. 4.8 d. 5.1arrow_forward
- 1. Find the inventory turnover at retail of Walker Manufacturing. The starting inventory at retail was $630,300 and the ending inventory at retail was $417,600. Sales for the year totaled $2,388,870. Round your answer to the nearest tenth. _____ 2. The cost of goods sold for Veltron International last year amounted to $534,600, and the average inventory at cost was $213,840. The published inventory turnover at cost is 6.6. Calculate the inventory turnover at cost, and if it is less than the published rate, calculate the target average inventory at cost (in $). (If the actual turnover is greater than the published rate, enter "above" for target average inventory.) Inventory turnover at cost _____ Target average inventory at cost$ ____arrow_forwardLewis Incorporated and Clark Enterprises report the following amounts for the year. Lewis ClarkInventory (beginning) $ 24,000 $ 50,000Inventory (ending) 18,000 60,000Purchases 261,000 235,000Purchase returns 15,000 60,000Required:1. Calculate cost of goods sold for each company.2. Calculate the inventory turnover ratio for each company.3. Calculate the average days in inventory for each company.4. Explain which company appears to be managing its inventory more efficiently.arrow_forwardThe following data were extracted from the income statement of Brecca Systems Inc.: Current Year Preceding Year Sales $1,533,000 $1,377,915 Beginning inventories 150,275 135,275 Cost of goods sold 876,000 835,100 Ending inventories 124,275 150,275 a. (1). Determine for each year the inventory turnover. Round to one decimal place. Current year fill in the blank 1 Preceding year fill in the blank 2 (2). Determine for each year the number of days' sales in inventory. Assume there are 365 days in the year. Round intermediate calculations to the nearest whole dollar and final answers to one decimal place. Current year fill in the blank 3 days Preceding year fill in the blank 4 daysarrow_forward
- The following data (in millions) were taken from recent annual reports of Tomato Computer, Inc., a manufacturer of personal computers and related products, and Happy Times Corporation, a manufacturer and distributor of greeting cards and related products: Tomato Happy Times Cost of merchandise sold $4,890,100 $941,700 Inventory, end of year 98,000 98,000 Inventory, beginning of the year 60,000 121,000 a. Determine the inventory turnover for Tomato and Happy Times. Round to one decimal place. Tomato Happy Times b. Would you expect Happy Times inventory turnover to be higher or lower than Tomato’s?arrow_forwardThe following is a portion of the condensed income statement for Rowan, Inc., a manufacturer of plastic containers: Net sales Less: Cost of goods sold: Inventory, January 1 Net purchases Inventory, December 31 Gross profit $ 830,000 3,900,000 (790,000) Inventory turnover ratio $4,460,000 Required: 1. Determine Rowan's inventory turnover. (Round your answer to 2 decimal places.) times 3,940,000 $ 520,000arrow_forwardConcert Coorporation had a Cost of goods Sold of 1,350,000 for the third Quarter. The beginning inventory at Cost was 145,000, and the ending inventory at cost amounted to 160, 900. The inventory turnover rate published as Standard for industry a business at this Size is 9.5 times Round inventories to nearest. Cent the and inventory turnovers to Dearest tenth Hab son (a) Calculate the aug inventory (in $) and actual inventory turnover rate for the Company! blad 8.1 aug inventory Inventory = 1/6 Turnover= R (b) If the turnover rate B less than 9.5 times Calculate the target aug inventory (in H.) needed to theoretically Standards. If the turnover rate Come to up industry is greater than 9.5 enter above? $arrow_forward
- The following is a portion of the condensed income statement for Rowan, Inc., a manufacturer of plastic containers: Net sales $ 2,460,000Less: Cost of goods sold:Inventory, January 1 $ 630,000Net purchases 1,900,000Inventory, December 31 (690,000) 1,840,000Gross profit $ 620,000 Required:1. Determine Rowan’s inventory turnover.2. What information does this ratio provide?arrow_forwardSLR Corporation has 1,200 units of each of its two products in its year-end inventory. Per unit data for each of the products are as follows: Product 1 Product 2 Cost $ 54 $ 36 Selling price 80 38 Costs to sell 4 5 Determine the carrying value of SLR’s inventory assuming that the lower of cost or net realizable value (LCNRV) rule is applied to individual products. What is the before-tax income effect of the LCNRV adjustment? What is the before-tax income effect of the LCNRV adjustment?arrow_forwardThe 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 fill in the blank 1 Year 1 fill in the blank 2 b. Number of days' sales in inventory. Round your final answer to one decimal place. Year 2 fill in the blank 3 days Year 1 fill in the blank 4 daysarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Financial ratio analysis; Author: The Finance Storyteller;https://www.youtube.com/watch?v=MTq7HuvoGck;License: Standard Youtube License