If the beginning balance of inventory is $16 000 and the ending balance is $30 000,credit sales for the period are $420 000 and cost of sales are $380 000,the days inventory calculation is:
A) 29 days.
B) 22 days.
C) 20 days.
D) 26 days.

Question

Quizplus · Accepted Answer

Days Inventory = (Average Inventory / Cost of Sales) x 365

Average Inventory = (Beginning Inventory + Ending Inventory) / 2
Average Inventory = ($16,000 + $30,000) / 2 = $23,000

Days Inventory = ($23,000 / $380,000) x 365
Days Inventory = 22.03

Rounding to the nearest whole number, Days Inventory = 22 days. Therefore, the correct answer is B.

If the Beginning Balance of Inventory Is $16 000 and the Ending