Turin Turbines had $250,000 worth of goods on hand at the beginning of the year.During the year they made purchases of $2,200,000 and sales of $4,200,000.At year-end they counted the inventory still on hand and had $212,500.What was their cost of sales for the year?
A)$1,787,500
B)$2,462,500
C)$2,200,000
D)$2,237,500

Question

Quizplus · Accepted Answer

Cost of sales can be calculated by subtracting the value of ending inventory from the sum of beginning inventory and purchases, and the result is the cost of goods sold.
Therefore, Cost of sales = Beginning inventory + Purchases - Ending inventory
Cost of sales = $250,000 + $2,200,000 - $212,500
Cost of sales = $2,237,500

Thus, the best choice is D.

Turin Turbines Had $250,000 Worth of Goods on Hand at the Beginning