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In its financial statements WalkerCo reported cost of goods sold of $1,837. Inventory at the beginning...

In its financial statements WalkerCo reported cost of goods sold of $1,837. Inventory at the beginning of the year was $370 and at the end of the year $414. In the footnotes it is reported that the LIFO reserve at the beginning of the year was $59 and at the end of the year $99. 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 = $370 + $59 = $429
Ending Inventory = Ending Inventory under LIFO + LIFO reserve at the end of the year = $414 + $99 = $513
Cost of goods sold = Cost of goods sold under LIFO + LIFO reserve at the beginning - LIFO reserve at the end = $1837 + $59 - $99 = $1797
Average Inventory = [$429 + $513]/2 = $471
Days sales in Inventory = 365 days x [$471 / $1797]
Days sales in Inventory = 95.7 days
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