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Given the following information, how many times does the firm turnover its Accounts Payable during the year? Beginning inventory = $50,000 Ending inventory = $45,000 Beginning Accounts Receivable = $60,000 Ending Accounts Receivable = $66,000 Beginning Accounts Payable = $70,000 Ending Accounts Payable = $84,000 Sales = $1,000,000 % credit sales = 60% Cost of goods sold = $450,000
Given the following information, how many times does the firm turnover its Accounts Payable during the year?
Beginning inventory = $50,000
Ending inventory = $45,000
Beginning Accounts Receivable = $60,000
Ending Accounts Receivable = $66,000
Beginning Accounts Payable = $70,000
Ending Accounts Payable = $84,000
Sales = $1,000,000
% credit sales = 60%
Cost of goods sold = $450,000
Expert Solution
Computation of the inventory turnover:-
Inventory turnover = Cost of goods sold / Average inventory
= $450,000 / $47,500
= 9.47 times
Working note:-
Average inventory = (Beginning inventory + Ending inventory) / 2
= ($50,000 + $45,000) / 2
= $95,000 / 2
= $47,500
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