Use the Table for the Question(s)below

question 4

Multiple Choice

Use the table for the question(s) below.
Luther Industries had sales of $980 million and a cost of goods sold of $560 million in 2006.A simplified balance sheet for the firm appears below:
Luther Industries
Balance Sheet
As of December 31,2006
(millions of dollars)
-Luther's Inventory days is closest to:

• A)32 days
• B)59 days
• C)39 days
• D)42 days

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Definitions:

Understated

Described or estimated below the actual size, quantity, or importance.

FOB Shipping Point

A term indicating that the buyer assumes responsibility for the goods and the costs of transportation at the point of departure from the seller's shipping dock.

Ending Inventory

At the close of an accounting period, the value of products available for sale is calculated by taking the initial inventory, adding any purchases, and then deducting the cost of goods sold.

Cost Flow Assumption

An accounting method that determines the cost of goods sold and ending inventory valuation, examples include FIFO, LIFO, and weighted average.