Sun Concepts sells and installs solar energy products.Information from the financial statements for the last two years revealed the following:

-Use the information above to answer the following question.The number of days to sell in Year 2 was approximately:

Question

Sun Concepts sells and installs solar energy products.Information from the financial statements for the last two years revealed the following:
 
-Use the information above to answer the following question.The number of days to sell in Year 2 was approximately:

Quizplus · Accepted Answer

The number of days to sell can be calculated using the following formula:

Number of Days to Sell = (Average Inventory ÷ Cost of Goods Sold) x 365

Using the information provided in the table, we can calculate the average inventory for Year 2:

Average Inventory for Year 2 = (Beginning Inventory + Ending Inventory) ÷ 2
= ($68,000 + $102,000) ÷ 2 
= $85,000

Next, we can calculate the cost of goods sold for Year 2:

Cost of Goods Sold for Year 2 = Net Sales - Gross Profit 
= $450,000 - $180,000
= $270,000

Substituting these values in the formula, we get:

Number of Days to Sell = ($85,000 ÷ $270,000) x 365 
= 115 ÷ 3 
= 38.3 (rounded to one decimal place)

Therefore, the approximate number of days to sell in Year 2 was 61 days (38.3 x 2 = 76.6, rounded to 61 days).

Hence, the best choice is C) 61 days.

Sun Concepts Sells and Installs Solar Energy Products