Required: Monson sells 30 units for $35 each on December 15. Monson uses a perpetual inventory system. Determine the costs assigned the December 31 ending Inventory when costs are assigned based on LIFO.
Required: Monson sells 30 units for $35 each on December 15. Monson uses a perpetual inventory system. Determine the costs assigned the December 31 ending Inventory when costs are assigned based on LIFO.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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### Required Information
Trey Monson starts a merchandising business on December 1 and engages in the following three inventory purchases. On December 15, Monson sells 30 units for $35 each.
- **Purchases on December 7:** 20 units at $14.00 cost
- **Purchases on December 14:** 36 units at $21.00 cost
- **Purchases on December 21:** 30 units at $25.00 cost
### Task
Monson sells 30 units for $35 each on December 15. Monson uses a perpetual inventory system. Determine the costs assigned to the December 31 ending inventory when costs are assigned based on LIFO (Last In, First Out).
### Perpetual LIFO Inventory Table
The table is divided into three main sections: Goods Purchased, Cost of Goods Sold, and Inventory Balance, each further divided into columns:
1. **Date** – The date of each transaction.
2. **Goods Purchased**:
- **# of units** – Number of units purchased.
- **Cost per unit** – Cost of each unit.
- **Cost of Goods Available for Sale** – Total cost of goods available before sales.
3. **Cost of Goods Sold**:
- **# of units sold** – Number of units sold.
- **Cost per unit** – Cost of each unit sold.
- **Cost of Goods Sold** – Total cost of units sold.
4. **Inventory Balance**:
- **# of units** – Remaining units in inventory.
- **Cost per unit** – Cost of remaining inventory units.
- **Inventory Balance** – Total value of remaining inventory.
**Transaction Details (Illustrated in Table):**
- **December 7:**
- 20 units purchased at $14.00 each.
- **December 14:**
- 36 units purchased at $21.00 each.
- **December 15:**
- 30 units sold at $35 each. The cost of the 30 units sold is calculated using LIFO; hence, the most recently purchased units (36 units at $21.00) are sold first.
- **December 21:**
- 30 units purchased at $25.00 each.
### Understanding LIFO in a Perpetual Inventory System
Using the LIFO method, when sales occur
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