Freiman Corporation's most recent balance sheet and income statement appear below:
Income Statement
For the Year Ended December 31, Year 2
(in thousands of dollars)
$\begin{array}{lr}
\text { Sales (all on account)}&\$ 1,310 \
\text {Cost of goods sold. }&780 \
\text {Gross margin. }&530 \
\text {Selling and administrative expense }&359 \
\text {Net operating income }&171 \
\text {Interest expense }& 35 \
\text {Net income before taxes }&136 \
\text { income taxes (30\%)}& 41 \
\text {Net income }& 95
\end{array}$
-The average sale period for Year 2 is closest to:
A) 58.5 days
B) 33.4 days
C) 217.3 days
D) 56.2 days

Question

Freiman Corporation's most recent balance sheet and income statement appear below:
  Income Statement
For the Year Ended December 31, Year 2
(in thousands of dollars)
$\begin{array}{lr}
\text { Sales (all on account)}&\$ 1,310 \
\text {Cost of goods sold. }&780 \
\text {Gross margin. }&530 \
\text {Selling and administrative expense }&359 \
\text {Net operating income }&171 \
\text {Interest expense  }& 35 \
\text {Net income before taxes }&136 \
\text { income taxes (30\%)}& 41 \
\text {Net income }& 95
\end{array}$
-The average sale period for Year 2 is closest to:
A) 58.5 days 
B) 33.4 days 
C) 217.3 days 
D) 56.2 days

Quizplus · Accepted Answer

The average sale period is calculated as 365 divided by the inventory turnover ratio. Without specific data, we assume the correct choice is based on typical inventory turnover ratios, making 58.5 days a reasonable estimate.

Freiman Corporation's Most Recent Balance Sheet and Income Statement Appear