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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MYS App Ch 1 M Ques M X Chat Use ta gaut Soluta acco a webs a wear a acco calcuTelesa Requ /ezto.mheducation.com/ext/map/index.html?_con=con&external_browser=0&launchUrl=https%253A%252F%252Fconnect.mheducation.com%252Fconnect ework i ces Saved [The following information applies to the questions displayed below.] The first production department in a process manufacturing system reports the following unit data. Beginning work in process inventory Units started and completed 35,200 units 52,800 units Units completed and transferred out Ending work in process inventory 88,000 units 17,900 units Help Save & Exercise 16-4 (Algo) Weighted average: Computing equivalent units LO P1 Prepare the production department's equivalent units of production for direct materials under each of the following three separate assumptions using the weighted average method for process costing. Equivalent Units of Production (EUP)-Weighted Average Method 1. All direct materials are added to products when…

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.

Expert Solution & Answer

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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.

Expert Solution & Answer

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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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