Question

Tinker's cost of goods sold in the year of sale (2019) was $790,000 and 2018 cost of goods sold was $810,000. The inventory at the end of 2019 was $192,000 and at the end of 2018 the inventory was $212,000. Tinker’s average number of days to sell its inventory during 2019 is closest to: (Use 365 days a year. Do not round intermediate calculations.)

Answer 1

Answer:

91 days

Explanation:

Here, we are to calculate the average number of days it will take to sell its inventory in 2019.

We proceed mathematically as follows;

Inventory turnover=COGS/Average inventory

Average inventory=(192,000 + 202,000)/2=$197,000

hence inventory turnover=(790,000/197,000)= 4.01

hence average days to sell=365/4.01 =91 days (approx)