Question

Use the information below to answer the following question.

The 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 cost of merchandise sold for the sale of May 20 using the FIFO inventory cost method.

a.$120

b.$180

c.$144

d.$136

Answer 1

Option d. $136 is correct answer.

Explanation:-

1. Determination of the Cost of merchandise Sold for the sale of May 20 using the Perpeual FIFO inventory cost method:-
Boxwood Company
Schedule of Cost of Goods Sold
First In First Out (FIFO) Method
For the Month Ended May 31
	Purchases			Cost of merchandise Sold			Inventory
Date	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost
May 3	5	$                                20	$                 100				5	$                        20	$              100
May 10				3	$               20	$                    60	2	$                        20	$                40
May 17	10	$                                24	$                 240				2	$                        20	$                40
							10	$                        24	$              240
May 20				2	$               20	$                    40
				4	$               24	$                    96	6	$                        24	$              144
May 23				3	$               24	$                    72	3	$                        24	$                72
May 30	10	$                                30	$                 300				3	$                        24	$                72
							10	$                        30	$              300
Total				12	$               88	$                  268
Cost of merchandise Sold for the sale of May 20
	Cost of merchandise Sold
Date	Quantity	Unit Cost	Total Cost
May 20	2	$                                20	$                    40
	4	$                                24	$                    96
Total	6		136

Feel free to ask any clarification, if required. Please provide feedback by thumbs up, if satisfied. It will be highly appreciated. Thank you.