Sun Concepts sells and installs solar energy products.Information from the financial statements for the last two years revealed the following:

-Use the information above to answer the following question.The number of days to sell in Year 2 was approximately:
A) 75 days
B) 66 days
C) 61 days
D) 73 days

Question

Sun Concepts sells and installs solar energy products.Information from the financial statements for the last two years revealed the following:
 
-Use the information above to answer the following question.The number of days to sell in Year 2 was approximately:
A) 75 days 
B) 66 days 
C) 61 days 
D) 73 days

Quizplus · Accepted Answer

The number of days to sell can be calculated using the following formula:

Number of Days to Sell = (Average Inventory ÷ Cost of Goods Sold) x 365

Using the information provided in the table, we can calculate the average inventory for Year 2:

Average Inventory for Year 2 = (Beginning Inventory + Ending Inventory) ÷ 2
= ($68,000 + $102,000) ÷ 2 
= $85,000

Next, we can calculate the cost of goods sold for Year 2:

Cost of Goods Sold for Year 2 = Net Sales - Gross Profit 
= $450,000 - $180,000
= $270,000

Substituting these values in the formula, we get:

Number of Days to Sell = ($85,000 ÷ $270,000) x 365 
= 115 ÷ 3 
= 38.3 (rounded to one decimal place)

Therefore, the approximate number of days to sell in Year 2 was 61 days (38.3 x 2 = 76.6, rounded to 61 days).

Hence, the best choice is C) 61 days.

Sun Concepts Sells and Installs Solar Energy Products