Mist, Inc. uses a PERIODIC inventory system and has the following transactions for one of its inventory items during 2020: Beginning Inventory 127 units @ $43 per unit Purchases       Purchase 1 on 3/11/20 53 units @ $45 per unit Purchase 2 on 10/18/20 90 units @ $46 per unit         Sales       Sale 1 on 3/15/20 110 units @ $70 per unit Sale 2 on 10/22/20 110 units @ $70 per unit All units sold on 3/15/20 were from beginning inventory. The 10/22/20 sale included 40 units from the 3/11/20 purchase and 70 units from the 10/18/20 purchase. Show how Mist's Balance Sheet and Income Statement would differ under each of the inventory cost flow assumptions. Compute Ending Inventory, COGS and Gross Profit under Specific Identification, Weighted Average Cost, FIFO and LIFO. Fill in your answers on the table.

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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.