# CMA Study Group

View Only

## Part 2 actuvity ratio ( can anyone explain how 960000 come in this solution

• #### 1.  Part 2 actuvity ratio ( can anyone explain how 960000 come in this solution

Posted 12 days ago
November 30, November 30,
Year 2           Year 1
Net credit sales                                  \$6,205,000
Gross receivables         \$350,000       320,000
Inventory                         780,000          870,000
Cost of goods sold                               4,380,000
Question: 40Volpone Company's average number of days to sell inventory for Year 2 is
A. 51.18
B. 65.00
C. 71.51
D. 72.50
The average days to sell inventory equals 365 days divided by the inventory turnover (cost of goods
sold ÷ average inventory). Thus, turnover is 5.0345 times {\$4,380,000 COGS ÷ [(\$960,000 +
\$780,000) ÷ 2]}. Average days to sell inventory is 72.5 days (365 ÷ 5.034

------------------------------
None
CHANDLODIA , AHMEDABABD
India
------------------------------

• #### 2.  RE: Part 2 actuvity ratio ( can anyone explain how 960000 come in this solution

Posted 11 days ago
Hi Hiren,

You have pasted an in correct question. the question is not complete. i searched other sources in the net which give the question as below :

 The following inventory and sales data are available for the current year for Volpone Company. Volpone uses a 365-day year when computing ratios.                     November 30, 2010       November 30, 2009 Net credit sales        \$6,205,000    Gross receivables         350,000                  320,000 Inventory                 960,000                  780,000 Cost of goods sold      4,380,000    Volpone Company's average number of days to sell inventory for the current year is  A. 80.00 days. B. 65.00 days. C. 51.18 days. D. 72.50 days.

------------------------------
YASIR ALI
Accountant
KOLKATA
India
------------------------------