Refer to the following selected financial information from Graceworks, Corp. Compute the company's days' sales in inventory for Year 2. (Use 365 days a year.) $$\begin{array} { | l | r | r | }
\hline & \text { Year 2 } & \text { Year 1 } \
\hline \text { Merchandise inventory } & 271,000 & 253,500 \
\hline \text { Cost of goods sold } & 486,400 & 433,100 \
\hline
\end{array}$$
A) 203.4.
B) 228.4.
C) 179.5.
D) 215.1.
E) 113.3.

Question

Refer to the following selected financial information from Graceworks, Corp. Compute the company's days' sales in inventory for Year 2. (Use 365 days a year.) $$\begin{array} { | l | r | r | } 
\hline & \text { Year 2 } & \text { Year 1 } \
\hline \text { Merchandise inventory } & 271,000 & 253,500 \
\hline \text { Cost of goods sold } & 486,400 & 433,100 \
\hline
\end{array}$$
A) 203.4.
B) 228.4.
C) 179.5.
D) 215.1.
E) 113.3.

Quizplus · Accepted Answer

Days' sales in inventory = (Average merchandise inventory / Cost of goods sold) x 365 daysAverage merchandise inventory = (Beginning merchandise inventory + Ending merchandise inventory) / 2= (253,500 + 271,000) / 2= 262,250Days' sales in inventory = (262,250 / 486,400) x 365 days= 203.4 days

Refer to the Following Selected Financial Information from Graceworks, Corp