Inventory turnover ratio : This is a financial measure that is used to evaluate as to how many times a company sells or uses its inventory during an accounting period. It is calculated by using the following formula: Inventory turnover = Cost of goods sold Average inventory Days in inventory: Days in inventory are used to determine number of days a particular company takes to make sales of the inventory available with them. Days' sales in inventory = Days in accounting period Inventory turnover LIFO Reserve: It is a contra inventory account that shows the difference between the inventory cost under FIFO and inventory cost under LIFO. This account is recorded when a company uses FIFO method for its inventory valuation but uses LIFO method for financial reporting. To Compute: The inventory turnover and days in inventory of Company D for 2017.

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Answer 1

Question

Chapter 6, Problem 6.13E

(a)

To determine

Inventory turnover ratio: This is a financial measure that is used to evaluate as to how many times a company sells or uses its inventory during an accounting period. It is calculated by using the following formula:

Inventory turnover = Cost of goods soldAverage inventory

Days in inventory: Days in inventory are used to determine number of days a particular company takes to make sales of the inventory available with them.

Days' sales in inventory=Days in accounting periodInventory turnover

LIFO Reserve: It is a contra inventory account that shows the difference between the inventory cost under FIFO and inventory cost under LIFO. This account is recorded when a company uses FIFO method for its inventory valuation but uses LIFO method for financial reporting.

To Compute: The inventory turnover and days in inventory of Company D for 2017.

(b)

To determine

To Compute: The current ratio and adjust the LIFO reserve using the 2017 data.

(c)

To determine

To Comment: the effect of ignoring the LIFO reserve affects the evaluation of Company D’s liquidity.

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The partnership of Keenan and Kludlow paid the following wages during this year: Line Item Description Amount M. Keenan (partner) $108,000 S. Kludlow (partner) 96,000 N. Perry (supervisor) 54,700 T. Lee (factory worker) 35,100 R. Rolf (factory worker) 27,200 D. Broch (factory worker) 6,300 S. Ruiz (bookkeeper) 26,000 C. Rudolph (maintenance) 5,200 In addition, the partnership owed $250 to Rudolph for work he performed during December. However, payment for this work will not be made until January of the following year. The state unemployment tax rate for the company is 2.95% on the first $9,000 of each employee's earnings. Compute the following: ound your answers to the nearest cent. a. Net FUTA tax for the partnership for this year b. SUTA tax for this year

Answer 2

Question

Chapter 6, Problem 6.13E

(a)

To determine

Inventory turnover ratio: This is a financial measure that is used to evaluate as to how many times a company sells or uses its inventory during an accounting period. It is calculated by using the following formula:

Inventory turnover = Cost of goods soldAverage inventory

Days in inventory: Days in inventory are used to determine number of days a particular company takes to make sales of the inventory available with them.

Days' sales in inventory=Days in accounting periodInventory turnover

LIFO Reserve: It is a contra inventory account that shows the difference between the inventory cost under FIFO and inventory cost under LIFO. This account is recorded when a company uses FIFO method for its inventory valuation but uses LIFO method for financial reporting.

To Compute: The inventory turnover and days in inventory of Company D for 2017.

(b)

To determine

To Compute: The current ratio and adjust the LIFO reserve using the 2017 data.

(c)

To determine

To Comment: the effect of ignoring the LIFO reserve affects the evaluation of Company D’s liquidity.

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Answer 3

Question

Chapter 6, Problem 6.13E

(a)

To determine

Inventory turnover ratio: This is a financial measure that is used to evaluate as to how many times a company sells or uses its inventory during an accounting period. It is calculated by using the following formula:

Inventory turnover = Cost of goods soldAverage inventory

Days in inventory: Days in inventory are used to determine number of days a particular company takes to make sales of the inventory available with them.

Days' sales in inventory=Days in accounting periodInventory turnover

LIFO Reserve: It is a contra inventory account that shows the difference between the inventory cost under FIFO and inventory cost under LIFO. This account is recorded when a company uses FIFO method for its inventory valuation but uses LIFO method for financial reporting.

To Compute: The inventory turnover and days in inventory of Company D for 2017.

(b)

To determine

To Compute: The current ratio and adjust the LIFO reserve using the 2017 data.

(c)

To determine

To Comment: the effect of ignoring the LIFO reserve affects the evaluation of Company D’s liquidity.

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Answer 4

Question

Chapter 6, Problem 6.13E

(a)

To determine

Inventory turnover ratio: This is a financial measure that is used to evaluate as to how many times a company sells or uses its inventory during an accounting period. It is calculated by using the following formula:

Inventory turnover = Cost of goods soldAverage inventory

Days in inventory: Days in inventory are used to determine number of days a particular company takes to make sales of the inventory available with them.

Days' sales in inventory=Days in accounting periodInventory turnover

LIFO Reserve: It is a contra inventory account that shows the difference between the inventory cost under FIFO and inventory cost under LIFO. This account is recorded when a company uses FIFO method for its inventory valuation but uses LIFO method for financial reporting.

To Compute: The inventory turnover and days in inventory of Company D for 2017.

(b)

To determine

To Compute: The current ratio and adjust the LIFO reserve using the 2017 data.

(c)

To determine

To Comment: the effect of ignoring the LIFO reserve affects the evaluation of Company D’s liquidity.

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Answer 5

Chapter 6, Problem 6.13E

(a)

To determine

Inventory turnover ratio: This is a financial measure that is used to evaluate as to how many times a company sells or uses its inventory during an accounting period. It is calculated by using the following formula:

Inventory turnover = Cost of goods soldAverage inventory

Days in inventory: Days in inventory are used to determine number of days a particular company takes to make sales of the inventory available with them.

Days' sales in inventory=Days in accounting periodInventory turnover

LIFO Reserve: It is a contra inventory account that shows the difference between the inventory cost under FIFO and inventory cost under LIFO. This account is recorded when a company uses FIFO method for its inventory valuation but uses LIFO method for financial reporting.

To Compute: The inventory turnover and days in inventory of Company D for 2017.

(b)

To determine

To Compute: The current ratio and adjust the LIFO reserve using the 2017 data.

(c)

To determine

To Comment: the effect of ignoring the LIFO reserve affects the evaluation of Company D’s liquidity.

Answer 6

Chapter 6, Problem 6.13E

(a)

To determine

Inventory turnover ratio: This is a financial measure that is used to evaluate as to how many times a company sells or uses its inventory during an accounting period. It is calculated by using the following formula:

Inventory turnover = Cost of goods soldAverage inventory

Days in inventory: Days in inventory are used to determine number of days a particular company takes to make sales of the inventory available with them.

Days' sales in inventory=Days in accounting periodInventory turnover

LIFO Reserve: It is a contra inventory account that shows the difference between the inventory cost under FIFO and inventory cost under LIFO. This account is recorded when a company uses FIFO method for its inventory valuation but uses LIFO method for financial reporting.

To Compute: The inventory turnover and days in inventory of Company D for 2017.

Answer 7

Chapter 6, Problem 6.13E

(a)

To determine

Inventory turnover ratio: This is a financial measure that is used to evaluate as to how many times a company sells or uses its inventory during an accounting period. It is calculated by using the following formula:

Inventory turnover = Cost of goods soldAverage inventory

Days in inventory: Days in inventory are used to determine number of days a particular company takes to make sales of the inventory available with them.

Days' sales in inventory=Days in accounting periodInventory turnover

LIFO Reserve: It is a contra inventory account that shows the difference between the inventory cost under FIFO and inventory cost under LIFO. This account is recorded when a company uses FIFO method for its inventory valuation but uses LIFO method for financial reporting.

To Compute: The inventory turnover and days in inventory of Company D for 2017.

Answer 8

(b)

To determine

To Compute: The current ratio and adjust the LIFO reserve using the 2017 data.

Answer 9

(b)

To determine

To Compute: The current ratio and adjust the LIFO reserve using the 2017 data.

Answer 10

(c)

To determine

To Comment: the effect of ignoring the LIFO reserve affects the evaluation of Company D’s liquidity.

Answer 11

(c)

To determine

To Comment: the effect of ignoring the LIFO reserve affects the evaluation of Company D’s liquidity.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 6 - The key to successful business operations is...Ch. 6 - Prob. 2Q Ch. 6 - What is just-in-time inventory management? What...Ch. 6 - Prob. 4Q Ch. 6 - Prob. 5Q Ch. 6 - Prob. 6Q Ch. 6 - Prob. 7Q Ch. 6 - Prob. 8Q Ch. 6 - What is the major advantage and major disadvantage...Ch. 6 - The selection of an inventory cost flow method is...

Solution Summary: The author explains the inventory turnover ratio, which is used to evaluate how many times a company sells or uses its inventory.

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To Compute: The current ratio and adjust the LIFO reserve using the 2017 data.

To Comment: the effect of ignoring the LIFO reserve affects the evaluation of Company D’s liquidity.

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