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The ending inventory is your actual cost of all products purchased for resale that are sitting on the shelf, not yet sold, as of December 31, 2016. If you take a physical inventory of the items and the amount you paid for it (do not use retail value) this is your ending inventory figure.
The purpose of inventory and/or cost of goods sold is that the IRS does not allow items that have not yet been sold to reduce the income received during the year from other products. The ending inventory should reflect only items on the shelf that were not sold on December 31st. The ending inventory will be your beginning inventory next year.
The ending inventory is your actual cost of all products purchased for resale that are sitting on the shelf, not yet sold, as of December 31, 2016. If you take a physical inventory of the items and the amount you paid for it (do not use retail value) this is your ending inventory figure.
The purpose of inventory and/or cost of goods sold is that the IRS does not allow items that have not yet been sold to reduce the income received during the year from other products. The ending inventory should reflect only items on the shelf that were not sold on December 31st. The ending inventory will be your beginning inventory next year.
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