## Related questions with answers

Financial statement data for years ending December 31 for Holland Company follow:

$\begin{array}{lrr} & \mathbf{2 0 Y 4} & \mathbf{2 0 Y 3} \\ \hline \begin{array}{l} \text { Cost of merchandise sold } \\ \text { Inventories: } \end{array} & \$ 4,504,500 & \$ 3,715,200 \\ \quad \text { Beginning of year } & 788,000 & 760,000 \\ \quad \text { End of year } & 850,000 & 788,000 \end{array}$

a. Determine the inventory turnover for $20 \mathrm{Y} 4$ and $20 \mathrm{Y} 3$.

b. Determine the days' sales in inventory for $20 \mathrm{Y} 4$ and 20Y3. Use 365 days and round to one decimal place.

c. Does the change in inventory turnover and the days' sales in inventory from $20 \mathrm{Y} 3$ to $20 \mathrm{Y} 4$ indicate a favorable or an unfavorable trend?

Solution

VerifiedIn this problem, we are asked to determine the inventory turnover and days’ sales in inventory of Holland Company.

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