Questions: Trey Monson starts a merchandising business on December 1 and enters into the following three inventory purchases. Monson uses a perpetual inventory system. Also, on December 15, Monson sells 15 units for 33 each. Purchases on December 7 Purchases on December 14 10 units 19.60 cost 20 units 25.00 cost 15 units 27.00 cost Determine the costs assigned to ending inventory when costs are assigned based on the LIFO method.

To determine the costs assigned to ending inventory using the LIFO (Last-In, First-Out) method, we need to follow the sequence of purchases and sales, and apply the LIFO principle. Here’s the step-by-step process:

1. Purchases on December 7:

   • 10 units @ $19.60 each

2. Purchases on December 14:

   • 20 units @ $25.00 each
   • 15 units @ $27.00 each

3. Sales on December 15:

   • 15 units sold @ $33 each

Inventory before sales:

• 10 units @ $19.60
• 20 units @ $25.00
• 15 units @ $27.00

Sales on December 15:

• According to LIFO, the last units purchased are sold first.
• Therefore, the 15 units sold will be taken from the most recent purchase (15 units @ $27.00).

Remaining Inventory after sales:

• 10 units @ $19.60
• 20 units @ $25.00

1. Units remaining:

   • 10 units @ $19.60 = $196.00
   • 20 units @ $25.00 = $500.00

2. Total cost of ending inventory:

   • $196.00 + $500.00 = $696.00

The costs assigned to ending inventory when costs are assigned based on the LIFO method is $696.00.

This calculation ensures that the most recent costs are used for the cost of goods sold, and the older costs remain in the ending inventory.