Question

Use the information below to answer the following question. Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1. Date Blankets Units Cost May 3 Purchase 5 $20 10 Sale 3 17 Purchase 10 24 20 Sale 6 23 Sale 3 30 Purchase 10 30 Assuming that the company uses the perpetual inventory system, determine the ending inventory value for the month of May using the FIFO inventory cost method.

Answer 1

Answer:

Boxwood Company

Determination of the Ending Inventory, using the FIFO method:

Date                      Blankets Units       Unit Cost   Total cost

May 17 Purchase              3                   24                $72

May 30 Purchase           10                    30             $300

Total cost of Ending Inventory = $372 ($72 + 300)

Explanation:

a) Inventory Records during May:

Date                      Blankets Units       Cost

May 3 Purchase              5                  $20

May 10 Sale                     3                            

May 17 Purchase            10                    24

May 20 Sale                    6

May 23 Sale                     3

May 30 Purchase           10                    30

May 31 Ending Balance  13

FIFO method of costing inventory is based on the assumption that a business entity sells older stock of goods first before the latest goods brought into the store.  FIFO means First-in, First-out.  It is one of the methods of costing inventory.  Others include LIFO, Weighted Average, and Specific Identification.