Walker Corp. has current liabilities of $460,000, a quick ratio of .86, inventory turnover of 6.2, and a current ratio of 1.4. What is the cost of goods sold for the company? (Do not round intermediate calculations.)
Current Ratio = Current Assets / Current Liabilities
1.4 = Current Assets / $460,000
Current Assets = $460,000 * 1.4
= $644,000
Quick Ratio = (Current Assets - Inventory - Prepaid expenses) / Current Liabilities
= .86 = ($644,000 - Inventory - 0) / $460,000
$460,000 * .86 = $644,000 - Inventory
$395,600 = $644,000 - Inventory
Inventory = $644,000 - $395,600
= $248,400
Assuming the above to be Average Inventory
Inventory Turnover = Cost of goods sold / Average Inventory
6.2 = Cost of goods sold / $248,400
Cost of goods sold = $248,400 * 6.2
= $1,540,080
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