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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 01-04-2022 03:08 AM
    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
    Answer (D) is correct.
    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

    ------------------------------
    HIREN RADADIYA
    None
    CHANDLODIA , AHMEDABABD
    India
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  • 2.  RE: Part 2 actuvity ratio ( can anyone explain how 960000 come in this solution

    Posted 01-05-2022 01:08 AM
    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
    ------------------------------

    Original Message