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 $25 each. Purchases on December 7 Purchases on December 14 Purchases on December 21 Required: Monson uses a perpetual inventory system. Determine the costs assigned to the December 31 ending inventory based on the FIFO method. Perpetual FIFO: Date December 7 December 14 December 15 December 21 20 units @ $10.00 cost 36 units@ $15.00 cost 30 units @ $18.00 cost # of Units Goods Purchased Cost Per Unit Goods Purchased # of Units Sold Cost of Goods Sold Cost Per Cost of Goods Unit Sold Inventory Balance Cost Per Unit # of Units Inventory Balance

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.