Purchasers - #44,880
Sales - #85,850
Trade creditors - #12,250
Trade debtors - #24,000
Accrued expenses - # 350
Prepaid expenses - # 700
Stock 1/1/2006 - #25,120
Stock 31/12/2006 - #27,840
Determine the number of times stock was turned over during the period to the nearest figure
Sales - #85,850
Trade creditors - #12,250
Trade debtors - #24,000
Accrued expenses - # 350
Prepaid expenses - # 700
Stock 1/1/2006 - #25,120
Stock 31/12/2006 - #27,840
Determine the number of times stock was turned over during the period to the nearest figure
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Correct Answer: Option B
Explanation:
Turnover ratio is the cost of goods sold divided by the average stock for the same period
Cost of goods sold = opening stock + purchases - closing stock
25,120 + 44,880 - 27,840 = 42,160
Average stock = opening stock + closing stock / 2
25,120 + 27,840 = 52960 / 2 = 26,480
Turn over = 42,160 / 26,480 = 1.59Â times Approximately 2 times
Turnover ratio is the cost of goods sold divided by the average stock for the same period
Cost of goods sold = opening stock + purchases - closing stock
25,120 + 44,880 - 27,840 = 42,160
Average stock = opening stock + closing stock / 2
25,120 + 27,840 = 52960 / 2 = 26,480
Turn over = 42,160 / 26,480 = 1.59Â times Approximately 2 times