If a company records inventory purchases at standard cost and also records purchase price variances, prepare the  journal entry for a purchase of widgets that were bought at $7.45 per unit and have a standard cost of $7.15.  The total amount owed to the vendor for this purchase is $33,525.

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A:

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A:

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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.