Question

My chosen answer is wrong. I know I have to use the accounts payable turnover formula and the turnover expressed in days formula. The formulas are:

A company reports Cost of Goods Sold of $275,000, Ending Inventory of $120,000, Beginning Inventory of $15,000, Ending Accounts Payable of $110,000 and Beginning Accounts Payable of $80,000. What is the days' payable outstanding? (Round any intermediary calculations to two decimal places and your final answer to the nearest day.) 91 days 146 days O 106 days 84 days

Accounts payable turnover (T/O) = Purchases from suppliers (assumed all on credit) ÷ Average accounts payable

Turnover expressed in days = 365 ÷ T/O (computed from the formula above)

Answer 1

Formula for Day's Payable Outstanding : Avg accounts payable / purchases * 365 days Avgg Accounts payable $95,000 Purchases : We have formula : Cost of goods sold = Beg Inventory + purchases - Ending Inventory Therefore, Purchases : Cost of goods sold Add: Ending inventory Less : Beginning inventory $ 275,000.00 $ 120,000.00 $ (15,000.00) Purchases during the year $ 380,000.00 Days Payable Outstanding 91.25 91 Days Closest