Question

B)

A company had gross profit of $156,420 on net sales of $234,630. If ending inventory was $7,920 and average inventory was $7,900, what is the company's inventory turnover?

A) A company had expenses other than cost of goods sold of $262,000. Determine sales and gross profit given cost of goods sold was $106,000 and net income was $162,000.

Answer 1

A)Gross Profit - Other Expenses = Net Income

Gross Profit = Net Income + Other Expenses

= $ 162,000 + $ 262,000

= $ 424,000

Sales - Cost of Goods Sold = Gross Profit

Sales = Gross Profit + COst of Goods Sold

= $ 424,000 + $ 106,000

= $ 530,000

Hence the correct answers are:

Sales =$ 530,000

Gross Profit = $ 424,000

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B) Inventory Turnover = Cost of Goods Sold / Average Inventory

= ( Sales - Gross Profit) / $ 7,900

= ($ 234,630 - $ 156,420 ) / $ 7,900

= 9.90

Hence the correct answer is 9.90