B6.  LO 7.3Record the following transactions in the purchases journal: Feb. 2 Purchased inventory on account from Pinetop Inc. (vendor account number 3765), Purchase Order (PO) # 12345 in the amount of $3,456. Feb. 8 Purchased inventory on account from Sherwood Company (vendor account number 5461), PO# 12346, in the amount of $2,951. Feb. 12 Purchased inventory on account from Green Valley Inc. (vendor #4653), PO# 12347, in the amount of $4,631.

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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.