Tinker's cost of goods sold in the year of sale (2016) was $750,000 and 2015 cost of goods sold was $770,000. The inventory at the end of 2016 was $188,000 and at the end of 2015 the inventory was $208,000. Tinker's average number of days to sell its inventory during 2016 is closest to:

Question

Quizplus · Accepted Answer

The formula to calculate the average number of days to sell inventory is:

Average number of days to sell inventory = (Ending inventory / Cost of goods sold) * 365

For 2016, the calculation would be:

Average number of days to sell inventory = (188,000 / 750,000) * 365
Average number of days to sell inventory = 0.25 * 365
Average number of days to sell inventory = 91.25 or approximately 96 days (rounded to the nearest whole number)

Therefore, the answer is A) 96.

Tinker's Cost of Goods Sold in the Year of Sale