Please show the complete solution. Thank you so much. 1. On January 5, CRYSTAL LANCER Company purchased 5,000 units of Class A inventory at P100 each and 10,000 units of Class B inventory at P80 each under credit terms of 3/10, EOM. The Class A type was paid on January 15 and the Class B type on January 25. Q1. Under the gross method, what amount of net purchases should be included in computing total goods available for sale? a. P1,300,000 b. P1,261,000 c. P1,285,000 d. P1,276,000 Q2. Under the net method, what amount of net purchases should be included in computing total goods available for sale? a. P1,300,000 b. P1,261,000 c. P1,285,000 d. P1,276,000

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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.