Question
Sokos Corporation sells item A as part of its product line. Transactions related to this product during December 2020 are summarized below. Date Transaction Units
Sokos Corporation sells item A as part of its product line. Transactions related to this product during December 2020 are summarized below.
Date | Transaction | Units | Amount per Unit | ||||
Dec. 1 | Inventory | 50 | $ | 30.00 | |||
Dec. 4 | Sale | 40 | 36.00 | ||||
Dec. 11 | Purchase | 75 | 33.00 | ||||
Dec. 13 | Sale | 60 | 37.50 | ||||
Dec. 20 | Purchase | 80 | 34.00 | ||||
Dec. 27 | Sale | 50 | 40.00 | ||||
Sokos uses a perpetual inventory system and makes its inventory purchases on account. It uses the FIFO inventory costing method and the lower of cost and net realizable value rule on an individual item basis. Its fiscal year ends on December 31 each year. All sales are on account.
5. Assume that the Companys accountant ignored the LC&NRV rule. How would this error affect the Companys inventory turnover ratio?
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