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,this company has inventory on hand for approximately:
A)203 days.
B)44 days.
C)61 days.
D)26 days.

Question

Quizplus · Accepted Answer

Avg.inventory = (prior EB inventory + current EB inventory)/2
($72,500 + $65,500)/2 = $69,000
Inventory turnover ratio = COGS/Avg.Inventory
$572,700/$69,000 = 8.3
Days to sell = 365/Inventory Turnover Ratio
365/8.3 = 44 days.

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