In an effort to increase sales, DARIO Company inaugurated a sales promotional campaign on June 30, 2021. DARIO Company placed a coupon redeemable for a premium in each package of cereal sold. Each premium cost DARIO Company P20 and five coupons must be presented by a customer to receive  a premium. DARIO Company estimated that only 60% of the coupons issued will be redeemed. For the six months ended December 31, 2021 the following information is available. Package of cereal sold            Premiums purchased               Coupons redeemed 160,000                                               12,000                         40,000               What is the estimated liability for premiums on December 31, 2021 A. 160,000 B. 384,000 C. 224,000 D. 288,000

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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.