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

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.

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