Quick Stop Dairy had beginning inventory of Heavy Cream of 200 units at a cost of $2 each. During the month, they had the following purchases:   1st purchase:   500 units at $3 each 2nd purchase:  400 units at $4 each   Quick Stop Dairy sold 1,000 units to a customer. Using a FIFO cost flow assumption, determine the cost of goods sold for this sale as well as the balance in ending 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.