A company just starting business made the following four inventory purchases in June: June 1 100 units $350 June 10 150 units 570 June 15 150 units 600 June 28 100 units 470 $1990 A physical count of merchandise inventory on June 30 reveals that there are 200 units on hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for June is $1260. Ⓒ$870. Ⓒ$1120. Ⓒ$730.

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.