Sun Concepts sells and installs solar energy products.Information from the financial statements for the last two years revealed the following: $\begin{array}{cccc}
& \text { Beginning Inventory } & \text { Ending Inventory } & \text { Cost of Goods Sold } \
\text { Year 1 } & \$ 90,000 & \$ 130,000 & \$ 605,000 \
\text { Year 2 } & 130,000 & 110,000 & 720,000
\end{array}$ Compared with Year 1,Sun Concept's number of days to sell in Year 2 was:

Question

Sun Concepts sells and installs solar energy products.Information from the financial statements for the last two years revealed the following: $\begin{array}{cccc} 
& \text { Beginning Inventory } & \text { Ending Inventory } & \text { Cost of Goods Sold } \
\text { Year 1 } & \$ 90,000 & \$ 130,000 & \$ 605,000 \
\text { Year 2 } & 130,000 & 110,000 & 720,000
\end{array}$ Compared with Year 1,Sun Concept's number of days to sell in Year 2 was:

Quizplus · Accepted Answer

To calculate the number of days to sell, also known as the inventory turnover days, we first need to find the inventory turnover ratio, which is the cost of goods sold divided by the average inventory. The average inventory is calculated as (Beginning Inventory + Ending Inventory) / 2. For Year 1, the average inventory is ($90,000 + $130,000) / 2 = $110,000. For Year 2, it is ($130,000 + $110,000) / 2 = $120,000. The inventory turnover ratio for Year 1 is $605,000 / $110,000 = 5.5 times, and for Year 2, it is $720,000 / $120,000 = 6 times. To find the number of days to sell, we divide the number of days in a year (365) by the inventory turnover ratio. For Year 1, it's 365 / 5.5 = 66.36 days, and for Year 2, it's 365 / 6 = 60.83 days. Therefore, the number of days to sell in Year 2 was shorter than in Year 1.

Sun Concepts Sells and Installs Solar Energy Products Compared with Year 1,Sun Concept's Number of Days to Sell