The following is information for Palmer Co. Year 3 Year 2 Year 1 Cost of goods sold $578, 825 Ending inventory $361, 650 93,250 $326, 300 98,000 102, 900 Use the above information to compute inventory turnover for Year 3 and Year 2, and its days' sales in inventory at December 31, Year 3 and Year 2 (a) Use the above information to compute inventory turnover for Year 2, and its days' sales in inventory at December 31, Year 2.
The following is information for Palmer Co. Year 3 Year 2 Year 1 Cost of goods sold $578, 825 Ending inventory $361, 650 93,250 $326, 300 98,000 102, 900 Use the above information to compute inventory turnover for Year 3 and Year 2, and its days' sales in inventory at December 31, Year 3 and Year 2 (a) Use the above information to compute inventory turnover for Year 2, and its days' sales in inventory at December 31, Year 2.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![**Palmer Co. Inventory Information and Analysis**
The following is information for Palmer Co.
| | Year 3 | Year 2 | Year 1 |
|-----------------|----------|----------|----------|
| Cost of goods sold | $578,825 | $361,650 | $326,300 |
| Ending inventory | 102,900 | 93,250 | 98,000 |
Use the above information to compute inventory turnover for Year 3 and Year 2, and its days' sales in inventory at December 31, Year 3 and Year 2.
---
**(a) Use the above information to compute inventory turnover for Year 2, and its days' sales in inventory at December 31, Year 2.**
| | Numerator | / | Denominator | = | Ratio |
|--------------------|-----------|---|-------------|---|-------|
| Inventory turnover | | | | | 0 |
| Days' sales in inventory | | | | | 0 |
---
**(b) Use the above information to compute inventory turnover for Year 3, and its days' sales in inventory at December 31, Year 3.**
| | Numerator | / | Denominator | = | Ratio |
|--------------------|-----------|---|-------------|---|-------|
| Inventory turnover | | | | | 0 |
| Days' sales in inventory | | | | | 0 |
---
**Explanation:**
To calculate inventory turnover, use the formula:
\[
\text{Inventory Turnover} = \frac{\text{Cost of Goods Sold}}{\text{Average Inventory}}
\]
To calculate days' sales in inventory, use:
\[
\text{Days' Sales in Inventory} = \frac{365}{\text{Inventory Turnover}}
\]
Average Inventory is calculated as the average of the beginning and ending inventory for the period in question.
Fill in the tables with these calculations for Year 2 and Year 3 using the data provided.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F97b5df25-1667-438a-b46e-c2a0d1ae7c86%2F18262c64-22f2-4d14-aaee-de18e7ddb155%2Fx595xj4_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Palmer Co. Inventory Information and Analysis**
The following is information for Palmer Co.
| | Year 3 | Year 2 | Year 1 |
|-----------------|----------|----------|----------|
| Cost of goods sold | $578,825 | $361,650 | $326,300 |
| Ending inventory | 102,900 | 93,250 | 98,000 |
Use the above information to compute inventory turnover for Year 3 and Year 2, and its days' sales in inventory at December 31, Year 3 and Year 2.
---
**(a) Use the above information to compute inventory turnover for Year 2, and its days' sales in inventory at December 31, Year 2.**
| | Numerator | / | Denominator | = | Ratio |
|--------------------|-----------|---|-------------|---|-------|
| Inventory turnover | | | | | 0 |
| Days' sales in inventory | | | | | 0 |
---
**(b) Use the above information to compute inventory turnover for Year 3, and its days' sales in inventory at December 31, Year 3.**
| | Numerator | / | Denominator | = | Ratio |
|--------------------|-----------|---|-------------|---|-------|
| Inventory turnover | | | | | 0 |
| Days' sales in inventory | | | | | 0 |
---
**Explanation:**
To calculate inventory turnover, use the formula:
\[
\text{Inventory Turnover} = \frac{\text{Cost of Goods Sold}}{\text{Average Inventory}}
\]
To calculate days' sales in inventory, use:
\[
\text{Days' Sales in Inventory} = \frac{365}{\text{Inventory Turnover}}
\]
Average Inventory is calculated as the average of the beginning and ending inventory for the period in question.
Fill in the tables with these calculations for Year 2 and Year 3 using the data provided.
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