ABC company started its operations this year and began with no inventory on hand. It provided the following details of the purchases made during the month of January: Unit price $7 $8 $9 Date Units 1-Jan 300 15-Jan 450 28-Jan 750 The company uses FIFO method to value its inventory. At the end of the month, the ending inventory on hand is 900 units. Assuming the periodic inventory system, compute the cost of goods available for sale.

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Q: Vishnu

A:

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.