The following balance sheet information is provided for Patton Company:

Assuming Year 2 cost of goods sold is $730,000,what is the company's average days to sell inventory? (Use 365 days in a year.Do not round your intermediate calculations. )
A)17.5 days
B)18.25 days
C)19 days
D)20.86 days

Question

The following balance sheet information is provided for Patton Company:

Assuming Year 2 cost of goods sold is $730,000,what is the company's average days to sell inventory? (Use 365 days in a year.Do not round your intermediate calculations. )
A)17.5 days 
B)18.25 days 
C)19 days 
D)20.86 days

Quizplus · Accepted Answer

Inventory turnover = Cost of goods sold ÷ [(Beginning inventory + ending inventory)÷ 2]
Inventory turnover = $730,000 ÷ [($38,000 + $35,000)÷ 2] = $730,000 ÷ $36,500 = 20 times
Average days to sell inventory = 365 days ÷ Inventory turnover
Average days to sell inventory = 365 days ÷ 20 times = 18.25 days

The Following Balance Sheet Information Is Provided for Patton Company