The average inventory of Dyer Ltd for year ended 31 December 2012 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

Using the formula for days' inventory on hand: 
Days' inventory on hand = (Average inventory / Cost of goods sold) x 365 
91.25 = (70 000 / Cost of goods sold) x 365 
Cost of goods sold = $280 000.

The Average Inventory of Dyer Ltd for Year Ended 31