I can show you two approaches to answer your question.
One yard is 36 inches so 3 yards 6 inches is $3\times 36 + 6 $ inches. Multiply this number by 7 to obtain the number of inches in 3 yards 6 inches. Now divide by 36 to obtain the number of yards, and the remainder will give you the number of inches.
$3 \times 7 = 21$ so there 21 yards and more in 3 yards and 6 inches times 7. How much more? Seven times 6 inches more. 6 inches times 2 is 12 inches or one foot. Hence 7 times 6 inches is 3 feet plus 6 inches. Thus 7 times 3 yards 6 inches is 21 yards plus 3 feet and 6 inches.
I suggest you complete the problem both ways and check that the two results are the same.
If you had another similar problem which way would you solve it?