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Explanation & Answer
Attached.
(a)Compute Kroger’s inventory turnovers for fiscal years ending January 31, 2015, and
February 1, 2014, using:
(1)Cost of sales and LIFO inventory.
Using the information provided above, and substituting the values of sales in the years 2015 and
2014 respectively in the formula for turnovers we obtain;
𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑓𝑜𝑟 𝑗𝑎𝑛 31, 2015 =
𝑐𝑜𝑠𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑𝑠 𝑠𝑜𝑙𝑑
85512
=
= 15.0338
𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
5688
= 15.0338 times
𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑓𝑜𝑟 𝑓𝑒𝑏𝑟𝑢𝑎𝑟𝑦 1, 2014 =
𝑐𝑜𝑠𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑𝑠 𝑠𝑜𝑙𝑑 78138
=
= 13.8272
𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
5651
= 13.8272 times
(2)Cost of sales and FIFO inventory
𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑓𝑜𝑟 𝑗𝑎𝑛 31, 2015 =
𝑐𝑜𝑠𝑡 𝑜𝑓 𝑔𝑜𝑜𝑑𝑠 𝑠𝑜𝑙𝑑
85512
=
= 12.3341
𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦
6933
= 12.3341 times
𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑓𝑜𝑟 𝑓𝑒𝑏𝑟𝑢𝑎𝑟𝑦 1,
2014 =
𝑛𝑒�...
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