Chapter 6, Problem 6.15E

Calculate cost of goods sold, the inventory turnover ratio, and average days in inventory (LO6–2, 6–7)

Lewis Incorporated and Clark Enterprises report the following amounts for the year.

	Lewis	Clark
Inventory (beginning)	$ 24,000	$ 50,000
Inventory (ending)	18,000	60,000
Purchases	261,000	235,000
Purchase returns	15,000	60,000

Required:

  1.    Calculate cost of goods sold for each company.

  2.    Calculate the inventory turnover ratio for each company.

  3.    Calculate the average days in inventory for each company.

  4.    Explain which company appears to be managing its inventory more efficiently.