Data from Dunshee Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,170 and the cost of goods sold was $730. The average sale period for Year 2 is closest to:

Question

Data from Dunshee Corporation's most recent balance sheet appear below:  Sales on account in Year 2 amounted to $1,170 and the cost of goods sold was $730. The average sale period for Year 2 is closest to:

Quizplus · Accepted Answer

Inventory turnover = Cost of goods sold ÷ Average inventory balance
= $730 ÷ $100* = 7.30
*Average inventory balance = ($90 + $110)÷ 2 = $100
Average sale period = 365 days ÷ Inventory turnover
= 365 days ÷ 7.30 = 50.0 days

Data from Dunshee Corporation's Most Recent Balance Sheet Appear Below