Sales for 2013 grow by 25% Therefore, Sales for 2013 = 125410 x 125% = $ 156,763 Inventory turnover ratio for 2013 = 4.5 Sales/average inventory = 4.5 Average inventory = Sales/ 4.5 (31353+inventory at the end of 2013)/2 = 156763/4.5 (31353+inventory at the end of 2013)/2 = 34836 Inventory at the end of 2013 = 34836*2-31353 = 38319 Option b) is correct.

This part I do not understand can someone please explain However using COGS for inventory turnover ratio is more correct since inventory is at cost and does not includes profits. If we use COGS instead of sales, answer would be $26,475 which is more appropriate. Can someone provide the steps on how we came to 26475?