Waterway Industries just took its physical inventory on December 31. The count of inventory items on hand at the company’s business locations resulted in a total inventory cost of $282,300. In reviewing the details of the count and related inventory transactions, you have discovered the following items that had not been considered. 1.   Waterway Industries has sent inventory costing $25,210 on consignment to Richfield Company. All of this inventory was at Richfield’s showrooms on December 31. 2.   The company did not include in the count inventory (cost, $19,380) that was sold on December 28, terms FOB shipping point. The goods were in transit on December 31. 3.   The company did not include in the count inventory (cost, $12,360) that was purchased with terms of FOB shipping point. The goods were in transit on December 31. Compute the correct December 31 inventory.

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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.