Sheffield Company has $145,000 of inventory at the beginning of the year and $131,000 at the end of the year.Sales revenue is $1,972,800,cost of goods sold is $1,145,400,and net income is $248,400 for the year.On average,the number of days to sell inventory is approximately:
A)203 days.
B)44 days.
C)61 days.
D)26 days.

Question

Quizplus · Accepted Answer

Inventory turnover ratio = Cost of goods sold ÷ Average Inventory
= $1,145,400 ÷ [($145,000 + $131,000)÷ 2] = 8.3
Days to sell = 365 ÷ Inventory turnover ratio
= 365 ÷ 8.3 = 44.0

Sheffield Company Has $145,000 of Inventory at the Beginning of the Year