Question

MC Qu.83 Anthony Thomas Candies... Anthony Thomas Candies (ATC) reported the following financial data for 2018 and 2017: 2018 2017 Sales $312,000 $291,0e0 Sales returns and allowances 8,800 4,400 $286, 600 $303, 200 Net sales Cost of goods sold: Inventory, January 1 18,000 57,000 Net purchases 132, е00 139,000 Goods available for sale 189,000 157,000 Inventory, December 31 Cost of goods sold 74,000 57,000 115,000 100, еее Gross profit $188,200 $186,600 The average days inventory for ATC (rounded) for 2018 is:

Answer 1

Average Days Inventory = 365/ Inventory Turnover Rate
Iventory turnover Rate = Cost of Goods Sold / Average Inventory
Average Inventory = (Beginning Inventory + Ending Inventory ) / 2
Average Inventory = (57000+74000)/2
=$65,500
Inventory Turnover Rate = $ 189,000/65,500
=2.89
Average Days Inventory   = 365/2.89
=126.29
Average Days Inventory = 126.29