Excerpts from Zorra Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,370 and the cost of goods sold was $850.
-The average sale period for Year 2 is closest to:
A)55.9 days
B)90.1 days
C)83.7 days
D)226.5 days

Question

Excerpts from Zorra Corporation's most recent balance sheet appear below:  Sales on account in Year 2 amounted to $1,370 and the cost of goods sold was $850.
-The average sale period for Year 2 is closest to:
A)55.9 days 
B)90.1 days 
C)83.7 days 
D)226.5 days

Quizplus · Accepted Answer

Inventory turnover = Cost of goods sold F1F1F1S1F1F1F10 Average inventory balance
= $850 F1F1F1S1F1F1F10 $195* = 4.36
*Average inventory balance = ($210 + $180)F1F1F1S1F1F1F10 2 = $195
Average sale period = 365 days F1F1F1S1F1F1F10 Inventory turnover
= 365 days F1F1F1S1F1F1F10 4.36 = 83.7 days

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