Question

On December​ 31st, Datton, Inc. has cost of goods sold of $ 550000​, ending inventory is $ 101000​, beginning inventory is $ 120000​; and average accounts payable is $ 105000. What is the accounts payable turnover expressed as​ days? (Round any intermediary calculations to two decimal​ places, and round your final answer to the nearest​ day.) A. 72 B. 44 C. 117 D. 67

Answer 1

72 days

Step-by-step explanation:

The computation of the accounts payable turnover ratio is shown below:

Accounts payable turnover ratio = Total Purchases ÷ Average Accounts payable

As we know that

Cost of goods sold = Beginning inventory + total purchases - Ending inventory

i.e

Total Purchases = Cost of goods sold + Ending Inventory – Beginning Inventory

= $550,000 + $101,000 - $120,000

= $531,000

So, the account payable turnover ratio is

= $531,000 ÷ $105,000

= 5.06 times

Now in days it is

= 365 days ÷ 5.06 times

= 72 days