10SE Question:聽Broadway Communicatio... [FREE SOLUTION]

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Chapter 6: 10SE (page 360)

Question:Broadway Communications reported the following figures in its annual financial statements:
Cost of Goods Sold $ 18,400
Beginning Merchandise Inventory 560
Ending Merchandise Inventory 450
Compute the rate of inventory turnover and days鈥� sales in inventory for BroadwayCommunications. (Round to two decimal places.)

Short Answer

Expert verified

Inventory turnover:36.44

Days鈥� sales in inventory:10 days

Step by step solution

Step-by-Step-SolutionStep1: Inventory turnover

$i n v e n t o r y T u r n o v e r = \frac{C o s t o f g o o d s s o l d}{A v e r a g e I n v e n t o r y} = \frac{$ 18, 400}{\frac{$ 560 + $ 450}{2}} = \frac{$ 18, 400}{$ 505} = 36.44$

Days’ sales in inventory

$I n v e n t o r y T u r n o v e r = \frac{365}{I n v e n t o r y T u n r o v e r} = \frac{365}{36.44} = 10 d a y s$

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	2019	2018	2017
Net Sales Revenue	\( 220,000	\) 162,000	\( 176,000
Cost of Goods Sold:
Beginning Merchandise Inventory	\)22,000	\(29,000	\)46,000
Net cost of purchase	132,000	90,000	76,000
Cost of goods available for sale	154,000	119,000	122,000
Less: Ending Merchandise Inventory	32,000	22,000	29,000
Cost of goods sold	122,000	97,000	93,000
Gross Profit	98,000	65,000	83,000
Operating Expenses	72,000	38,000	48,000
Net Income	\( 26,000	\) 27,000	$ 35,000

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Short Answer

Step by step solution

Step-by-Step-SolutionStep1: Inventory turnover

Days’ sales in inventory

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