Ask Question
20 January, 17:22

Pretty, Inc. provides the following dа ta:2017 2016Cash $28,000 $21,000Accounts Receivable, Net 40,000 40,000Merchandise Inventory 53,000 30,000Property, Plant, and Equipment, Net 124,000 91,000Total Assets $245,000 $182,000Net Credit Sales $240,000Cost of Goods Sold (130,000) Gross Profit $110,000Calculate days' sales in inventory for 2017. (Round any intermediate calculations and your final answer to two decimal places.)

+5
Answers (1)
  1. 20 January, 20:08
    0
    The days' sales in inventory for 2017 is 116.61 days

    Explanation:

    For computing the days sales in inventory first, we have to compute the inventory turnover ratio which is shown below:

    Inventory turnover ratio = (Cost of goods sold : Average inventory)

    where,

    Average inventory = (Opening balance of inventory + ending balance of inventory) : 2

    = ($30,000 + $53,000) : 2

    = $41,500

    And, the cost of good sold is $130,000

    Now put these values to the above formula

    So, the answer would be equal to

    = $130,000 : $41,500

    = 3.13 times.

    And, the Days sales in inventory

    = (Total number of days in a year : inventory turnover ratio)

    = 365 days : 3.13 times

    = 116.61 days
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Pretty, Inc. provides the following dа ta:2017 2016Cash $28,000 $21,000Accounts Receivable, Net 40,000 40,000Merchandise Inventory ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers