Answer:
Please see explanation below
Explanation:
Lewis incorporated
Beginning inventory
$30,000
Add: purchases
$355,200
Less: purchases return
($21,000)
Net purchases
$334,200
Less: ending inventory
($24,000)
Cost of goods sold
$340,200
Clark enterprises
Beginning inventory
$56,000
Add: purchases
$185,800
Less purchases return
($66,000)
Net purchases
$119,800
Less: ending inventory
($66,000)
Cost of goods sold
$109,800
1. Lewis incorporated
•Cost of goods sold = $340,200
• The inventory turnover ratio = Cost of goods sold / average inventory
Cost of goods sold = $340,200
Average inventory = ($30,000 + $24,000) / 2 = $27,000
Inventory turnover ratio = $340,200 / $27,000
= 12.6 times
• Average days in inventory = (Cost of average inventory / cost of goods sold ) × 365
= ($27,000 / $340,200) × 365
= 29 days
1. Clark enterprises
•Cost of goods sold = $109,800
• The inventory turnover ratio = Cost of goods sold / average inventory
Cost of goods sold = $109,800
Average inventory = ($56,000 + $66,000)/2 = $61,000
Inventory turnover ratio = $109,800 / $61,000
= 1.8 times
• Average days in inventory = (Cost of average inventory / Cost of goods sold) × 100
= ($61,000 / $109,800) × 365
= 203 days
