Determine the number of days’ sales in inventory for 2012 and 2011. Round to one decimal place.

PE 7-7B Inventory turnover and number of days’ sales in inventory

The following financial statement data for years ending December 31 for Pinnell Company are shown below.

2012

2011

Cost of merchandise sold

$1,800,000

$1,428,000

Inventories:

Beginning of year

$570,000

$450,000

End of year

630,000

570,000

a. Determine inventory turnover for 2012 and 2011.

b. Determine the number of days’ sales in inventory for 2012 and 2011. Round to one decimal place.

c. Does the change in inventory turnover and the number of days’ sales in inventory from 2011 to 2012 indicate a favorable or unfavorable trend?

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