Use the following information that relates to Woolen Merchandising Inc., to compute the amount of inventory shrinkage for the year ended December 31, 2019: Opening Inventory Purchases Transportation-in Transportation-out Sales returns (at cost) Discount received Purchase returns Cost of goods sold Ending Inventory Shrinkage O $2,500 $4,800 O $6500 $800 $25,000 $192,500 $2,900 $5,700 $2,100 $1,700 $4,000 $196,000 $20,000 ?

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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.