Laker Company reported the following January purchases and sales data for its only product. For specific identification, ending inventory consists of 340 units from the January 30 purchase, 5 units from the January 20 purchase, and 15 units from beginning inventory. Date January 1 January 10 January 20 January 25 January 30 Activities Beginning inventory Sales Purchase Sales Purchase Totals Units Acquired at Cost 210 units @ $13.50 = 150 units @ $ 12.50 = 340 units @ 700 units $ 12.00- $ 2,835 1,875 4,080 $ 8,790 Units sold at Retail @ 160 units 180 units 340 units $ 22.50 $ 22.50

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Q: Define Gross Profit Method.

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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.