Presented below is information related to Windsor, Inc. for the month of January 2020. Ending inventory per perpetual records Ending inventory actually on hand Cost of goods sold Freight-out $28,500. 28,000 211,730 7,430 Insurance expense Rent expense Salaries and wages expense Sales discounts Sales returns and allowances Sales revenue $12,240 21,550 59,190 12,270 15,380 419,850 Prepare the necessary adjusting entry for inventory. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter "O" for the amounts.)

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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.