Jan. Purchased $18,200 of merchandise on account, FOB shipping 2. point, terms 2/15, n/30. 5. Paid freight of $ 190 on the January 2 purchase. 6. Returned $2,750 of the merchandise purchased on January 2. Sold merchandise on account. $37,300, FOB destination, 1/10, 13. n/30, The cost of merchandise sold was $22,400. 15. Paid freight of $215 for the merchandise sold on January 13 Paid for the purchase of January 2 less the return and discount. Received payment on account for the sale of January 13 less the 23. discount.

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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.