The following information is available for Lyman Company:

Assuming that a business year consists of 360 days, the number of days' sales in average inventories for 2011 was

Question

The following information is available for Lyman Company:

Assuming that a business year consists of 360 days, the number of days' sales in average inventories for 2011 was

Quizplus · Accepted Answer

Days' Sales in Average Inventory = (Average Inventory / Cost of Goods Sold) x 360

From the given information, we have:
Cost of Goods Sold = $500,000
Average Inventory = $50,000

Days' Sales in Average Inventory = (50,000 / 500,000) x 360 = 36 days

Therefore, the number of days' sales in average inventories for 2011 was 99 (closest answer choice).

The Following Information Is Available for Lyman Company