The inventory of Dyer Ltd for year ended 31 December 2016 was $70 000.The number of days' inventory on hand was 91.25 days.What was the cost of goods sold for the year?

Question

Quizplus · Accepted Answer

The number of days' inventory on hand is calculated as (Inventory / Cost of Goods Sold) * 365. Rearranging gives Cost of Goods Sold = (Inventory / Days' Inventory) * 365. Substituting the given values: ($70,000 / 91.25) * 365 = $280,000.

The Inventory of Dyer Ltd for Year Ended 31 December