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12 November, 13:32

Financial statement data at December 31 for Ecco Company are as follows: Cost of goods sold $552,500 Inventories: Beginning of year 200,000 End of year 140,000 Determine the number of days' sales in inventory for the year. a. 92.5 days b. 112.3 days c. 39.6 days d. 132.1 days

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  1. 12 November, 14:01
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    b. 112.3 days

    Explanation:

    The computation of the number of days' sales in inventory for the year is shown below:

    Day inventory outstanding = { (Beginning inventory + ending inventory) : 2}: cost of goods sold * number of days in a year

    = { ($200,000 + $140,000) : 2} : ($552,500) * 365 days

    = ($170,000) : ($552,500) * 365 days

    = 112.3 days
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