Inventory Analysis Adjusted trial balance is as follows:
12/31/06 12/31/05
Cash $60,000 Cash $19,000
Inventory 32,000 Inventory 31,000
Accounts Payable 18,000 Accounts Payable 16,000
Sales 200,000 Sales 185,000
Cost of Sales 435,000 Cost of Sales 424,000
Net income for 2006 was $55,000. Accounts Payable was used for merchandise purchases only.
Questions:
1. Calculate the cost of goods available for sale for the year ended December 31, 2006. How much were purchases during 2006?
2. Calculate the inventory ratio for 2006. How many days does it take the company to sell inventory, on the average, during 2006?
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