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In its financial statements WalkerCo reported cost of goods sold of $1,555. Inventory at the beginning...

In its financial statements WalkerCo reported cost of goods sold of $1,555. Inventory at the beginning of the year was $339 and at the end of the year $405. In the footnotes it is reported that the LIFO reserve at the beginning of the year was $145 and at the end of the year $95. Calculate the days' sales in inventory after accounting for the inpact of the LIFO valuation. Present your answer rounded to one decimal place, e.g., 20.0.

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Answer #1
Days sales in Inventory = 365 days x [Average Inventory / Cost of goods sold]
After accounting for the inpact of the LIFO valuation , the inventory and cost of goods sold would be as under
Beginning Inventory = Beginning Inventory under LIFO + LIFO reserve at the beginning of the year = $339 + $145 = $484
Ending Inventory = Ending Inventory under LIFO + LIFO reserve at the end of the year = $405 + $95 = $500
Cost of goods sold = Cost of goods sold under LIFO + LIFO reserve at the beginning - LIFO reserve at the end = $1555 + $145 - $95 = $1605
Average Inventory = [$484 + $500]/2 = $492
Days sales in Inventory = 365 days x [$492 / $1605]
Days sales in Inventory = 111.9 days
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