Question

For the year ended December 31, Depot Max's cost of merchandise 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

Answer 1

Answer:

option (b) 46

Explanation:

Data provided in the question:

Max's cost of merchandise sold = $56,900

Inventory at the beginning of the year = $6,540

Ending inventory = $7,250

Now,

Depot Max's number of days' sales in inventory

= $\frac{\textup{Ending inventory}}{\textup{Max's cost of merchandise sold}}\times360$

or

= $\frac{\ 7,250}{\ 56,900}\times360$

or

= 45.86 ≈ 46

Hence,

Depot Max's number of days' sales in inventory is closest to option (b) 46