Based on the following data for the current year,what is the number of days' sales in inventory (rounded to the nearest whole day)?

A)58
B)48
C)53
D)30

Question

Based on the following data for the current year,what is the number of days' sales in inventory (rounded to the nearest whole day)?

A)58 
B)48 
C)53 
D)30

Quizplus · Accepted Answer

Number of days' sales in inventory = (Average inventory / Cost of goods sold) x 365

Average inventory = (Beginning inventory + Ending inventory) / 2
Average inventory = ($35,000 + $30,000) / 2 = $32,500

Cost of goods sold = Net sales - Gross profit
Cost of goods sold = $145,000 - $60,000 = $85,000

Number of days' sales in inventory = ($32,500 / $85,000) x 365 = 139.41 days

Rounded to the nearest whole day, the answer is 139 days or approximately 53 days (since it is closer to 53 than 54). Therefore, the best choice is C.

Based on the Following Data for the Current Year,what Is