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Homework answers / question archive / Pascarelli Corporation inventory at the end of year 2 was $122,000 and its inventory at the end of year 1 was $150,000

Pascarelli Corporation inventory at the end of year 2 was $122,000 and its inventory at the end of year 1 was $150,000

Finance

Pascarelli Corporation inventory at the end of year 2 was $122,000 and its inventory at the end of year 1 was $150,000. Cost of goods sold amounted to $870,000 in year 2. The company's average sale period (turnover in days) for Year 2 is closest to blank days.

A. 51.2

B. 32.3

C. 230.1

D. 57.0

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Computation of Company's Average Sale Period (turnover in days) for Year 2:

Average Sales Period = 365 * Average Inventory / Cost of Goods Sold

Here,

Average Inventory = (Inventory at the end of Year 1 + Inventory at the end of Year 2) / 2

= ($150,000 + $122,000) / 2

Average Inventory = $136,000

Cost of Goods Sold = $870,000

 

Average Sales Period = 365 * $136,000 / $870,000 = 57.0 days

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