Let me clarify.
I have $2000 of inventory consisting of 2000 widgets I paid a $1 each for, and I sell them for $2 each.
Of that inventory I sold 10 widgets and had to throw another 10 away because they were bad, defective or whatever.
I'm going to report that I sold $20 worth of inventory. That will allow me to deduct $10 for the ones I actually sold, and another $10 for the ones I had to throw away. My EOY inventory balance will be $1980.00
