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Another way would be to create a contra inventory account where the spoilage would be recorded during the year at each count and closed to inventory at year end. This would still be debited to cost of goods sold at each period inventory has been counted to reflect to up to date cost of sales.
3. LIFO valuation can be permitted and justified in times of high inflation. As prices increase, businesses have to replace inventory being sold. LIFO, in this case, matches current costs against current revenues. As the higher priced inventory is sold, the higher the revenue realized on that sale, but also the higher the cost of the goods sold...
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