Asked by Brooke Ramsey on Jun 20, 2024
Verified
The average sale period for Year 2 is closest to:
A) 58.5 days
B) 33.4 days
C) 217.3 days
D) 56.2 days
Average Sale Period
The average time it takes for a company to complete a sales cycle from the initial contact to the final sale.
- Assess the company's credit management efficiency through the average collection period and the average sale period calculations.
Verified Answer
VC
Vrisy CalzadaJun 26, 2024
Final Answer :
A
Explanation :
Inventory turnover = Cost of goods sold ÷ Average inventory balance*
= $780 ÷ $125 = 6.24
* Average inventory balance = ($120 + $130)÷ 2 = $125
Average sale period = 365 days ÷ Inventory turnover
= 365 days ÷ 6.24 = 58.5 days (rounded)
Reference: CH14-Ref6
Data from Dunshee Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,170 and the cost of goods sold was $730.
= $780 ÷ $125 = 6.24
* Average inventory balance = ($120 + $130)÷ 2 = $125
Average sale period = 365 days ÷ Inventory turnover
= 365 days ÷ 6.24 = 58.5 days (rounded)
Reference: CH14-Ref6
Data from Dunshee Corporation's most recent balance sheet appear below: Sales on account in Year 2 amounted to $1,170 and the cost of goods sold was $730.
Learning Objectives
- Assess the company's credit management efficiency through the average collection period and the average sale period calculations.
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