Exercise 6-15A Calculate cost of goods sold, the inventory turnover ratio, and average days in inventory (LO6-2, 6-7) Skip to question [The following information applies to the questions displayed below.] Lewis Incorporated and Clark Enterprises report the following amounts for the year. Lewis Clark Inventory (beginning)$30,000 $56,000 Inventory (ending) 24,000 66,000 Purchases 355,200 185,800 Purchase returns 21,000 66,000

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

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