Question

The following information was available for Sandhill Company on December 31 2022: Beginning inventory $104000; Ending inventory $136000; cost of goods sold $744000; and sales $1080000. Sandhill's days in inventory is

a. 71.99 days
b. 40.56 days
c. 58.87 days
d. 49.80 days

Answer 1

Step-by-step explanation:

Days in inventory = (Average Inventory/Cost of Goods Sold)* 365

Where:

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

Average Inventory = ($104,000 + $136,000)/2 = $120,000

Hence:

Days in inventory = ($120,000/$744,000)*365 = 58.87 days