Question

Required information Use the following information for the Quick Study below. Trey Monson starts a merchandising business on December 1 and enters into the following three inventory purchases. Also, on December 15, Monson sells 30 units for $50 each. Purchases on December 7 Purchases on December 14 Purchases on December 21 20 units @ $20.00 cost 34 units @ $30.00 cost 30 units @ $36.00 cost QS 5-10 Perpetual: Assigning costs with FIFO LO P1 Required: Monson uses a perpetual inventory system. Determine the costs assigned to the December 31 ending inventory based on the FIFO method.

Answer 1

Under FIFO ,units acquired first are sold first .

	Goods purchased			Cost of goods sold			Inventory balance
DATE	# of units	cost per unit	Goods purchased	# of units sold	cost per unit	cost of goods sold	# of units	cost per unit	Inventory balance
Dec 7	20	20	400				20	20	400
Dec 14	34	30	1020				20	20	400
							34	30	1020
									1420
Dec 15				20	20	400
				10	30	300	34-10= 24	30	720
									720
Dec 21	30	36	1080				24	30	720
							30	36	1080
Total						700			1800