statements, you were able to obtain the following information: Merchandise inventory Trade accounts receivable Trade accounts payable Sales December 31, 2019 135,000 75,600 85,500 990,000 December 31, 2020 166,000 70,200 88,200 1,080,000 BOOBA Company paid its suppliers a total of P742,500 in 2019. In 2020, account totaling P6,000 were writt off as uncollectible. In addition, bad debts expense of P4,500 per year was recognized in 2019 and 2020. Required:

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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.