The inventory turnover for Year 2 is closest to:A) 1.06B) 0.94C) 4.36D) 4.24

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Erika Fuentes · Accepted Answer

Final Answer : C, Explanation :  Inventory Turnover = Cost of Goods Sold / Average InventoryAverage Inventory = (Beginning Inventory + Ending Inventory) / 2For Year 2:Cost of Goods Sold = 860,000Beginning Inventory = 120,000Ending Inventory = 90,000Average Inventory = (120,000 + 90,000) / 2 = 105,000Inventory Turnover = 860,000 / 105,000 = 8.19 timesTherefore, the inventory turnover for Year 2 is closest to 4.36 (C). Inventory turnover = Cost of goods sold ÷ Average inventory balance= $720 ÷ $165* = 4.36 (rounded)*Average inventory balance = ($170 + $160)÷ 2 = $165Reference: CH14-Ref5Freiman Corporation's most recent balance sheet and income statement appear below:

The inventory turnover for Year 2 is closest to:

A) 1.06
B) 0.94
C) 4.36
D) 4.24

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