Our family has just opened a "for profit" thrift store. We have attained merchandise from garage/tag sales, auctions and also donations. How do we handle the donations?

well first they can not really be called "donation" since you are not a charity and the person giving it gets no tax benefit.

You were given items that are put into inventory at 0 value since they cost you nothing. So they are held as inventory at 0 value on the books.