Smith Company presents the following data for 2012. $\begin{array}{llcc}
\text { Inventories, begmning of year} &\$310,150 \
\text { Inventories, end of year} &340,469\
\text { Cost of Goods Sold } &2,103,696\
\text { Net Sales } &8,690,150\
\end{array}$

The number of days' sales in inventory is:
A)65.8.
B)60.8.
C)59.1.
D)58.1.
E)60.4.

Question

Smith Company presents the following data for 2012. $\begin{array}{llcc}
  \text {  Inventories, begmning of year} &\$310,150  \
 \text {   Inventories, end of year} &340,469\
 \text { Cost of Goods Sold } &2,103,696\
 \text { Net Sales } &8,690,150\
\end{array}$

The number of days' sales in inventory is:
A)65.8.
B)60.8.
C)59.1.
D)58.1.
E)60.4.

Quizplus · Accepted Answer

The number of days' sales in inventory is calculated using the formula: $$ \text{Days' Sales in Inventory} = \left( \frac{\text{Average Inventory}}{\text{Cost of Goods Sold}} \right) \times 365 $$ where Average Inventory is $\frac{\text{Beginning Inventory} + \text{End Inventory}}{2}$. Given data: Beginning Inventory = \$310,150, End Inventory = \$340,469, and Cost of Goods Sold = \$2,103,696. So, $$ \text{Average Inventory} = \frac{\$310,150 + \$340,469}{2} = \$325,309.5 $$ Plugging into the formula: $$ \text{Days' Sales in Inventory} = \left( \frac{\$325,309.5}{\$2,103,696} \right) \times 365 \approx 59.1 $$

Smith Company Presents the Following Data for 2012 The Number of Days' Sales in Inventory Is: A)65

Smith Company Presents the Following Data for 2012 The Number of Days' Sales in Inventory Is:
A)65