Excerpts from Sydner Corporation's most recent balance sheet appear below:
Sales on account in Year 2 amounted to $1,390 and the cost of goods sold was $900.
-The average sale period for Year 2 is closest to:
A) 63.0 days
B) 89.2 days
C) 236.3 days
D) 97.3 days

Question

Excerpts from Sydner Corporation's most recent balance sheet appear below:
  Sales on account in Year 2 amounted to $1,390 and the cost of goods sold was $900.
-The average sale period for Year 2 is closest to:
A) 63.0 days 
B) 89.2 days 
C) 236.3 days 
D) 97.3 days

Quizplus · Accepted Answer

Inventory turnover = Cost of goods sold ÷ Average inventory balance
= $900 ÷ $220* = 4.09 (rounded)
*Average inventory balance = ($240 + $200) ÷ 2 = $220
Average sale period = 365 days ÷ Inventory turnover
= 365 days ÷ 4.09 = 89.2 days

Excerpts from Sydner Corporation's Most Recent Balance Sheet Appear Below