What costs should be included in the Merchandise Inventory account of a merchandising firm?

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The Merchandise Inventory account of a merchandising firm should include all costs necessary to acquire inventory and prepare it for sale, such as the purchase price of the merchandise, freight-in, import duties, inspection costs, and any other costs incurred in acquiring or producing the inventory. This is known as the landed cost or cost of goods sold (COGS). Allocated portions of period costs, such as rent, utilities, and administrative expenses, should not be included in the Merchandise Inventory account. The selling expenses should be recorded separately as they are not part of the cost of acquiring or preparing merchandise for sale.

What Costs Should Be Included in the Merchandise Inventory Account