Charles Corporation reports the following information for 20X1. Accounts Receivable – 1/1 $100,000 Accounts Receivable –...
Charles Corporation reports the following information for
20X1.
Accounts Receivable – 1/1 $100,000
Accounts Receivable – 12/31 150,000
Inventory – 1/1 40,000
Inventory – 12/31 55,000
Net Credit Sales 800,000
Cost of Goods Sold 450,000
Accumulated Depreciation 15,000
What is the average age of inventory for Charles Corporation?
a. 32.4 days
b. 39.9 days
c. 44.6 days
d. 38.5 days
e. None of the options listed
please help!thank you!
Homework Answers
Average inventory = (40000+55000)/2 = 47500
Inventory turnover ratio = Cost of goods sold/Average inventory = 450000/47500 = 9.47
Average age of inventory = Days in a year/Inventory turnover ratio = 365/9.47 = 38.5 days
Option d is correct.
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