Nittany Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 1:   Units Unit Cost Inventory, December 31, prior year 1,980 $ 4 For the current year:     Purchase, March 21 5,170 6 Purchase, August 1 2,880 7 Inventory, December 31, current year 4,110   Required: Compute ending inventory and cost of goods sold for the current year under FIFO, LIFO, and average cost inventory costing methods. Note: Round "Average cost per unit" to 2 decimal places and final answers to nearest whole dollar amount.

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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.