The following information was available for Hoover Company at December 31, 2014: beginning inventory $110,000; ending inventory $70,000; cost of goods sold $880,000; and sales $1,200,000. Hoover's days in inventory in 2014 was
A) 27.4 days.
B) 37.2 days.
C) 29.0 days.
D) 45.6 days.

Question

The following information was available for Hoover Company at December 31, 2014: beginning inventory $110,000; ending inventory $70,000; cost of goods sold $880,000; and sales $1,200,000. Hoover's days in inventory in 2014 was 
A) 27.4 days.
B) 37.2 days.
C) 29.0 days.
D) 45.6 days.

Quizplus · Accepted Answer

Days in inventory = (Average inventory / Cost of goods sold) x 365

Average inventory = (Beginning inventory + Ending inventory) / 2
Average inventory = ($110,000 + $70,000) / 2 = $90,000

Days in inventory = ($90,000 / $880,000) x 365 = 37.2 days

The Following Information Was Available for Hoover Company at December