Question

Nash's Trading Post, LLC had the following records:20222021Ending inventory$38,650$46,490Cost of goods sold234,100201,290What is Nash's's average days in inventory for 2022? (rounded) (Use 365 days for calculation. Round intermediate calculations to 1 decimal place, e.g. 12.1.)a.59.8 daysb.77.7 daysc.73.0 daysd.66.4 day

Answer 1

Average days in inventory = number of days/inventory turnover.

Inventory turnover = Cost of goods sold/average inventory.

Average inventory =( 46,490 + 38,650)/2

Average inventory = $ 42,570

Inventory turnover = 234,100/42,570

Inventory turnover = 5.5

Days in inventory for 2022 = 365/5.5

Days in inventory for 2022 = 66.4 days.

Hence, option D is the correct answer.

SUMMARY:

First need to calculate the inventory turnover for 2022 by dividing the cost of goods sold by average inventory. The average inventory is get by adding beginning inventory and ending inventory and dividing by 2.

Hence, option D is the correct answer.