For the year ended December 31, Depot Max's cost of goods sold was $56,900. Inventory at the beginning of the year was $6,540. Ending inventory was $7,250. Depot Max's number of days' sales in inventory is closest to a. 42 b. 46 c. 8 d. 44

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Business

Jessie Mcclain

19 April, 02:59

For the year ended December 31, Depot Max's cost of goods sold was $56,900. Inventory at the beginning of the year was $6,540. Ending inventory was $7,250. Depot Max's number of days' sales in inventory is closest to a. 42 b. 46 c. 8 d. 44

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Jeffery Gillespie · Answer 1

D) 44

Explanation:

first we must calculate inventory turnover:

Average inventory = ($6,540 + $7,250) / 2 = $6,895

Inventory turnover = $56,900 / $6,895 = 8.25

days' sales of inventory = 365 / 8.25 = 44.2 ≈ 44

Days' sales of inventory is the average number of days that it should take to sell the inventory.