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The Inventory Turnover for 2021 is 5.9 times and for 2022 is 10 times.
2021
Inventory Turnover = Cost of Goods sold / Average Inventory
Cost of Goods sold = $1,165,250/[($170,000+$225,000)/2]
Cost of Goods sold = $1,165,250/($395,000/2)
Cost of Goods sold = $1,165,250/197,500
Cost of Goods sold = 5.9 times
2022
Inventory Turnover = Cost of Goods sold / Average Inventory
Cost of Goods sold = $1,525,000/[($225,000+$80,000)/2]
Cost of Goods sold = $1,525,000/($305,000/2)
Cost of Goods sold = $1,525,000/152,500
Cost of Goods sold = 10 times
Therefore the Inventory Turnover for 2021 is 5.9 times and for 2022 is 10 times.
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The complete question is:
Pina Colada Corp. switched to a just-in-time inventory system. Its sales and Inventory amounts for 2021 and 2022 are shown below.
2021 2022
Sales revenue $3,360,000 $3,900,000
Cost of goods sold 1,165,250 1,525,000
Beginning inventory 170,000 225,000
Ending inventory 225,000 80,000
Determine the inventory turnover for 2021 and 2022.