Guttery Corporation has provided the following financial data from its balance sheet:
Sales on account in Year 2 totaled $1,450,000 and cost of goods sold totaled $900,000.
-The company's average sale period for Year 2 is closest to:
A) 65.6 days
B) 226.6 days
C) 43.8 days
D) 70.6 days

Question

Guttery Corporation has provided the following financial data from its balance sheet:
  Sales on account in Year 2 totaled $1,450,000 and cost of goods sold totaled $900,000.
-The company's average sale period for Year 2 is closest to:
A) 65.6 days 
B) 226.6 days 
C) 43.8 days 
D) 70.6 days

Quizplus · Accepted Answer

Inventory turnover = Cost of goods sold ÷ Average inventory*
= $900,000 ÷ $162,000 = 5.56 (rounded)
*Average inventory =
($174,000 + $150,000) ÷ 2 = $162,000
Average sale period = 365 days ÷ Inventory turnover
= 365 days ÷ 5.56 = 65.6 days (rounded)

Guttery Corporation Has Provided the Following Financial Data from Its