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Assume the following data for a retail business in 2013: Net sales: $640,000 Gross profit: 224,000 Expenses: 64,000 Net profit after tax: 160,000 Ending inventory:

Assume the following data for a retail business in 2013:

Net sales: $640,000

Gross profit: 224,000

Expenses: 64,000

Net profit after tax: 160,000

Ending inventory: 94,000

Beginning inventory: 86,000

(a) Calculate the inventory turnover.

(b) When the ending inventory is understated, how the gross profit for the period will be affected. Explain.

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