Use the Following Information for Davis Company to Compute Inventory

question 185

Multiple Choice

Use the following information for Davis Company to compute inventory turnover for Year 2.
$$\begin{array} { | l | r | r | } \hline & \text { Year 2 } & \text { Year 1 } \\\hline \text { Cost of goods sold } & 279,500 & 291,800 \\\hline \text { Ending inventory } & 47,700 & 49,350 \\\hline\end{array}$$

• A) 5.86
• B) 5.76
• C) 5.67
• D) 11.77
• E) 5.89

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Definitions:

LIFO method

Last In, First Out; an inventory valuation method where the most recently produced or purchased items are the first to be expensed.

Periodic system

An inventory valuation method where updates to inventory records are made on a periodic basis, usually at the end of an accounting period.

Beginning inventory

The value of a company's inventory at the start of an accounting period.

Perpetual inventory system

An inventory system that keeps continuous, real-time records of goods bought and sold, updating inventory accounts without physical counts.