For 2022, Superplus Inc.reported $48,000 beginning inventory and $52,000 ending inventory.Sales were $320,000 and gross profit was $110,000 for the same period.Based on these figures, days in inventory for 2022 was
A)59 days.
B)87 days.
C)57 days.
D)83 days.

Question

Quizplus · Accepted Answer

To calculate days in inventory, first, find the cost of goods sold (COGS) and average inventory. COGS = Sales - Gross Profit = $320,000 - $110,000 = $210,000. Average inventory = (Beginning Inventory + Ending Inventory) / 2 = ($48,000 + $52,000) / 2 = $50,000. Days in inventory = (Average Inventory / COGS) * 365 = ($50,000 / $210,000) * 365 ≈ 87 days.