A company has $72,500 in inventory at the beginning of the accounting period and $65,500 at the end of the accounting period.Sales revenue is $986,400,cost of goods sold is $572,700,and net income is $124,200 for the accounting period.On average,the number of days to sell inventory is approximately:
A) 203.
B) 44.
C) 61.
D) 26.

Question

Quizplus · Accepted Answer

To find the average number of days to sell inventory, we need to use the formula:

Average Inventory = (Beginning Inventory + Ending Inventory) / 2

Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory

Average Number of Days to Sell Inventory = 365 / Inventory Turnover Ratio

Using the given values:

Average Inventory = ($72,500 + $65,500) / 2 = $69,000
Inventory Turnover Ratio = $572,700 / $69,000 = 8.3
Average Number of Days to Sell Inventory = 365 / 8.3 = 44 days

Therefore, the best choice is B, which is 44, as it represents the average number of days to sell inventory.

A Company Has $72,500 in Inventory at the Beginning of the Accounting