The Eastern Corporation installed a new inventory management system at the beginning of 2015. Eastern reported an inventory turnover of 2.80 in 2015. Shown below are data from the company’s accounting record as reported by the new system: 2015 2016 Sales Revenue $19,000, 000 $20, 000, 000 Cost of Goods Sold 8,500, 000 8, 900,000 Beginning inventory 2, 500, 000 2, 530, 000 Ending Inventory 2, 530,000 2, 600, 000 Calculate the company’s (a) inventory turnover and (b) days’ sales in inventory for 2015 and 2016. Comment on your results.
Problems 6-5A
Inventory Turnover and Days’ Sales in Inventory
The Eastern Corporation installed a new inventory management system at the beginning of 2015. Eastern reported an inventory turnover of 2.80 in 2015. Shown below are data from the company’s accounting record as reported by the new system:
2015 2016
Sales Revenue $19,000, 000 $20, 000, 000
Cost of Goods Sold 8,500, 000 8, 900,000
Beginning inventory 2, 500, 000 2, 530, 000
Ending Inventory 2, 530,000 2, 600, 000
Calculate the company’s (a) inventory turnover and (b) days’ sales in inventory for 2015 and 2016. Comment on your results.
SE6-3
Identify Goods to be Included in Inventory:
Patterson Company has the following items at year-end. Identify which items should be included in Patterson’s year-end inventory count.
Ans: Goods in Transit sent to a client F.O.B shipping point.
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