Pascarelli Corporation's inventory at the end of Year 2 was $122,000 and its inventory at the end of Year 1 was $150,000.Cost of goods sold amounted to $870,000 in Year 2.The company's average sale period for Year 2 is closest to:
A) 230.1 days
B) 51.2 days
C) 57.0 days
D) 32.3 days

Question

Quizplus · Accepted Answer

Inventory turnover = Cost of goods sold ÷ Average inventory*
= $870,000 ÷ $136,000 = 6.40 (rounded)
*Average inventory =
($122,000 + $150,000) ÷ 2 = $136,000
Average sale period = 365 days ÷ Inventory turnover
= 365 days ÷ 6.40 = 57.0 days (rounded)

Pascarelli Corporation's Inventory at the End of Year 2 Was