Faithful Books has the following transactions in August related to merchandise inventory. Determine the cost of goods sold and ending merchandise inventory by preparing a perpetual inventory record using the specific identification method. Assume the following costing information for the books sold during the​ month:   August ​3:   10 books costing $18 each   August ​15: 4 books costing $18 each and 9 books costing $21each   August ​28: 2 books costing $21each and 2 books costing $28 each Aug. 1 Beginning merchandise inventory, 16 books @ $18 each Aug. 3 Sold 10 books @ $21 each Aug. 12 Purchased 12 books @ $21 each Aug. 15 Sold 13 books @ $21 each Aug. 20 Purchased 3 books @ $28 each Aug. 28 Sold 4 books @ $22 each Start by entering the beginning inventory balances. Enter the transactions in chronological​ order, calculating new inventory on hand balances after each transaction. Once all of the transactions have been entered into the perpetual​ record, calculate the quantity and total cost of merchandise inventory​purchased, sold, and on hand at the end of the period.​

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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.