Based on the following data for the current year, what is the inventory turnover (rounded to one decimal place)? Sales on account during year $471,903 Cost of merchandise sold during year 217,752 Accounts receivable, beginning of year 46,168 Accounts receivable, end of year 54,621 Merchandise inventory, beginning of year 34,350 Merchandise inventory, end of year 42,090

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A: Shortage in inventory for adjusting entry = $14,610 - $13,080  Shortage in inventory = $1530

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.