If Palmer Company. Year 3 Year 2 Year 1 Cost of goods sold $ 643,825 $ 426,650 $ 391,300 Ending inventory 97,400 87,750 92,500 compute inventory turnover for Year 3 and Year 2, and its days' sales in inventory at December 31, Year 3 and Year 2:
a) Inventory turnover for Year 2, and its days' sales in inventory at December 31, Year 2
Inventory turnover =$426,650/($92,500+$87,750)/2
Inventory turnover=$426,650/$90,125
Inventory turnover=4.7 times
Days' sales in inventory=$87,750/$ 426,650×365 days
Days' sales in inventory=$87,750
Days' sales in inventory=75.07 days
b) Inventory turnover for Year 3, and its days' sales in inventory at December 31, Year 3
Inventory turnover=$643,825 /($87,750+$97,400)/2
Inventory turnover=$643,825/$92,575
Inventory turnover=6.95 times
Days' sales in inventory=$97,400/$643,825×365 days
Days' sales in inventory=55.22 days
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