Andromeda, Inc., purchased $100,000 of inventory during the year and had average receivables and payables of $46,575 and $21,918, respectively. The number of days' purchases in accounts payable was approximately

Question

Quizplus · Accepted Answer

Number of days' purchases in accounts payable = (Accounts payable / Cost of goods sold) x 365

Since cost of goods sold is not given, we can use purchases instead which is $100,000.

Number of days' purchases in accounts payable = ($21,918 / $100,000) x 365 = 80 days (approximately)