The following balance sheet information is provided for Patton Company: Assuming Year 2 cost of goods sold is $730,000, what are the company's average days to sell inventory? (Use 365 days in a year. Do not round intermediate calculations.)
A) 17.5 days
B) 18.25 days
C) 19 days
D) 20.86 days

Question

The following balance sheet information is provided for Patton Company:  Assuming Year 2 cost of goods sold is $730,000, what are the company's average days to sell inventory? (Use 365 days in a year. Do not round intermediate calculations.)
A) 17.5 days 
B) 18.25 days 
C) 19 days 
D) 20.86 days

Quizplus · Accepted Answer

Inventory turnover = Cost of goods sold ÷ [(Beginning inventory + ending inventory) ÷ 2
Inventory turnover = $730,000 ÷ [($35,000 + $38,000) ÷ 2] = $730,000 ÷ $36,500 = 20 times
Average days to sell inventory = 365 days ÷ Inventory turnover
Average days to sell inventory = 365 days ÷ 20 times = 18.25 days

The Following Balance Sheet Information Is Provided for Patton Company