Question

Trey Monson starts a merchandising business on December 1 and enters into the following three inventory purchases. Also, on December 15, Monson sells 15 units for \(20 each.

Purchased on December 7	10 units @ \)6
Purchased on December 14	20 units @ \(12
Purchased on December 21	15 units @ \)14

Required

Monson uses a perpetual inventory system. Determine the costs assigned to the December 31 ending inventory based on the FIFO method. (Round per unit costs and inventory amounts to cents.)

Short answer

Ending Inventory total$390.

Step-by-step solution

Definition of Inventory

Current assets of the business entity include a line item reporting the finished, semi-finished goods, and the raw material is known as inventory.

Ending inventory under FIFO method

Particular	Beginning Inventory/Purchases			Cost of goods sold			Ending Inventory
	Units	Per unit cost	Total cost	Units	Per unit cost	Total cost	Units	Per unit cost	Total cost
7 Dec	10	6	60				10	6	60
14 Dec	20	12	240				10	6	60
							20	12	240
15 Dec				10	6	60
				5	12	60	15	12	180
21 Dec	15	14	210				15	12	180
							15	14	210
							30		390