Question

The following information was available for Hover Company at Dec 31, 2011; beginning inventory $110k; ending inventory $70k; cost of goods sold $660k; and sales $900k. Hoover's days in inventory in 2011 was

Answer 1

Answer: Hoover's days in inventory in 2011 was 50 days.

Step-by-step explanation:

Given that,

Beginning inventory = $110000

Ending inventory = $70000

Cost of goods sold = $660000

Sales = $900000

Average Inventory =
`(Beginning\ Inventory + Ending\ Inventory)/(2)`

=
`(110000+70000)/(2)`

= 90000

Inventory Turnover =
`(cost\ of\ goods\ sold)/(Average\ Inventory)`

=
`(660000)/(90000)`

= 7.33

Hoover's days in inventory in 2011 =
`(Number\ of\ days\ in\ a\ year)/(Inventory\ Turnover)`

=
`(365)/(7.33)`

= 50 Days