Ex 7-10 (Immediate Accounting I 16# textbook) Assume that the business below maintains a perpetual inventory system. Determine the cost of merchandise sold for each sale and the inventory balance after each sale, assuming the FIFO method. Jan. 1                    Inventory         4,000 units at $20 April 19                Sale                  2,500 units June 30                 Purchase         6,000 units at $24 Sept. 2                  Sale                 4,500 units Nov. 15               Purchase           1,000 units at $25

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A: Under the LIFO method, the newest products in inventory have been sold first.

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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.