The following data are taken from the financial statements: Current Year Preceding Year Sales $3,600,000 $4,000,000 Cost of goods sold 2,000,000 2,700,000 Beginning inventory 372,000 352,000 Inventory, end of year 390,000 372,000 a. Determine for each year (1) the inventory turnover and (2) the number of days' sales in inventory. 1. The inventory turnover: (If required, round your answers to one decimal place.) Current Year fill in the blank 1 Preceding Year fill in the blank 2 2. The number of days' sales in inventory: Assume a 365-day year. (Round your intermediate calculation to whole number and final answers to two decimal places.) Current Year fill in the blank 3 days Preceding Year fill in the blank 4 days b. Comment on the favorable and unfavorable trends revealed by the data. Sales (decreased/increased) while gross profit (decreased/increased). The inventory turnover (declined/rose) and the number of days' sales in inventory (decreased/increased), which are unfavorable trends.
The following data are taken from the financial statements: Current Year Preceding Year Sales $3,600,000 $4,000,000 Cost of goods sold 2,000,000 2,700,000 Beginning inventory 372,000 352,000 Inventory, end of year 390,000 372,000 a. Determine for each year (1) the inventory turnover and (2) the number of days' sales in inventory. 1. The inventory turnover: (If required, round your answers to one decimal place.) Current Year fill in the blank 1 Preceding Year fill in the blank 2 2. The number of days' sales in inventory: Assume a 365-day year. (Round your intermediate calculation to whole number and final answers to two decimal places.) Current Year fill in the blank 3 days Preceding Year fill in the blank 4 days b. Comment on the favorable and unfavorable trends revealed by the data. Sales (decreased/increased) while gross profit (decreased/increased). The inventory turnover (declined/rose) and the number of days' sales in inventory (decreased/increased), which are unfavorable trends.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter6: Cost Of Goods Sold And Inventory
Section: Chapter Questions
Problem 58E: Analyzing Inventory The recent financial statements of McLelland Clothing Inc. include the following...
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The following data are taken from the financial statements:
| Current Year | Preceding Year | |
| Sales | $3,600,000 | $4,000,000 |
| Cost of goods sold | 2,000,000 | 2,700,000 |
| Beginning inventory | 372,000 | 352,000 |
| Inventory, end of year | 390,000 | 372,000 |
a. Determine for each year (1) the inventory turnover and (2) the number of days' sales in inventory.
1. The inventory turnover: (If required, round your answers to one decimal place.)
Current Year
fill in the blank 1
Preceding Year
fill in the blank 2
2. The number of days' sales in inventory: Assume a 365-day year. (Round your intermediate calculation to whole number and final answers to two decimal places.)
Current Year
fill in the blank 3 days
Preceding Year
fill in the blank 4 days
b. Comment on the favorable and unfavorable trends revealed by the data.
Sales (decreased/increased) while gross profit (decreased/increased). The inventory turnover (declined/rose) and the number of days' sales in inventory (decreased/increased), which are unfavorable trends.
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