Presented below is information related to JP Company. Date December 31, Year 1 December 31, Year 2 Ending Inventory (End-of-Year Prices) $180,000 220,500 Price Index 100 105

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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.