8.Using the facts from #7,please do the three journal entries from Problem #5, but nowusing the "periodic"method.Number 5 already been answered just there to provide assistance #5Using the following facts, please calculate the Inventory Turnover Ratio, as well asthe Days' Sales in Inventory Ratio. Facts: Beginning Inventory $450,000; Gross Profit$570,000; Ending Inventory $575,000; Net Sales $850,000. i) Inventory turnover ratio = Cost of goods sold/average inventory• Cost of goods sold = Net sales - Gross profitCost of goods sold = 850,000 - 570,000 = $280,000• Average inventory = (Beginning inventory + ending inventory) / 2Average inventory = (450,000 + 575,000) / 2Average inventory = 1,025,000 / 2Average inventory = $512,500Therefore, Inventory turnover ratio = Cost of goods sold/average inventoryInventory turnover ratio = 280,000 / 512,500Inventory turnover ratio = 0.5463414634 timesii) Days sales in inventory = number of days in a year / inventory turnover ratio• Number of days in a year = 365• Inventory turnover ratio is calculated as 0.5463414634Therefore, Days sales in inventory = number of days in a year / inventoryturnover ratioDays sales in inventory = 365 / 0.5463414634Days sales in inventory = 668.0803571608 days

Note: Information for preparing journal entries is missing and therefore, we will not answer that.…

Answered: Using the facts from #7, please do the…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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8. Using the facts from #7, please do the three journal entries from Problem #5, but now using the "periodic" method. Number 5 already been answered just there to provide assistance #5 Using the following facts, please calculate the Inventory Turnover Ratio, as well as the Days' Sales in Inventory Ratio. Facts: Beginning Inventory $450,000; Gross Profit $570,000; Ending Inventory $575,000; Net Sales $850,000.

i) Inventory turnover ratio = Cost of goods sold/average inventory
• Cost of goods sold = Net sales - Gross profit
Cost of goods sold = 850,000 - 570,000 = $280,000
• Average inventory = (Beginning inventory + ending inventory) / 2
Average inventory = (450,000 + 575,000) / 2
Average inventory = 1,025,000 / 2
Average inventory = $512,500
Therefore, Inventory turnover ratio = Cost of goods sold/average inventory
Inventory turnover ratio = 280,000 / 512,500
Inventory turnover ratio = 0.5463414634 times
ii) Days sales in inventory = number of days in a year / inventory turnover ratio
• Number of days in a year = 365
• Inventory turnover ratio is calculated as 0.5463414634
Therefore, Days sales in inventory = number of days in a year / inventory
turnover ratio
Days sales in inventory = 365 / 0.5463414634
Days sales in inventory = 668.0803571608 days

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