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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. 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
Expert Solution
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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