Problem 7. Consider the following data about Rock N' Roses Corp: Current ratio, 0.50; Quick ratio, 3.00; Current liabilities at year end, P150,000; Inventory, beginning of the year P25,000; Inventory turnover, 8.0x. Compute the following:

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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.