Use the following information for Shafer Company to compute inventory turnover for year 2.

Year 2 Year 1

Net sales $ 652,000 $ 583,800

Cost of goods sold 389,400 360,930

Ending inventory 78,600 80,280

4.90

Explanation:

Given:                           Year 2                   year 1

net sales:                     $652,000            $583,800

Cost of goods sold:     $389,400            $360,930

Ending inventory          $78,600              $80,280

We know, Inventory turnover=

First, lets find out the Average inventory.

Average inventory=

∴ Average inventory=

Hence, Average inventory= is 79440.

Now, finding the inventory turnover for year 2.

Inventory turnover=

∴ Inventory turnover= 4.90

Hence, Inventory turnover for year 2 is 4.90

the answer is a.

by: nicholas dooley