Question

At December 31, 2018, the following information was available for Deen Company: ending inventory $22,600; beginning inventory $21,400; cost of goods sold $171,000; and sales revenue $430,000. Calculate the inventory turnover and days in inventory for Deen.

Answer 1

Answer:

Using COGS

Inventory TurnOver  = 19.54

days in inventory =  46.95

Using Sales

Inventory TurnOver  = 19.54

days in inventory =  18.68

Explanation:

Inventory TurnOver = COGS or sales / Average Inventory

Were: average inventory =  (beginning + ending inventory ) / 2

days in inventory  =  365  / Inventory TurnOver

Some accounts work with COGS and some with sales, the latter being more used, but because you have the two option and didn't specifically declare any of the two I will give you answer for both of them, then it will your work to check which one are you using in your course.

Average inventory = (21400+22600 ) /2 = 22,000

Inventory TurnOver (using COGS) = 171,000/22,000 = 7.77

days in inventory (using COGS) = 365/7.77 = 46.97

Inventory TurnOver (using Sales) = 430,000/22,000 = 19.54

days in inventory (using Sales) = 365/19.54 = 18.68