Use the following information to answer the following questions. 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.
$\begin{array}{|l|l|l|l|}
\hline \text { Date } & \text { Product Z } & \text { Units } & \text { Cost } \
\hline \text { May 3 } & \text { Purchase } & 5 & \$ 20 \
\hline \text { May 10 } & \text { Sale } & 3 & \
\hline \text { May 17 } & \text { Purchase } & 10 & \$ 24 \
\hline \text { May 20 } & \text { Sale } & 6 & \
\hline \text { May 23 } & \text { Sale } & 3 & \
\hline \text { May 30 } & \text { Purchase } & 10 & \$ 30 \
\hline
\end{array}$ 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) $136
D) $144

Question

Quizplus · Accepted Answer

FIFO (First-In, First-Out) assumes that the first items purchased are the first items sold. Therefore, the cost of the 6 blankets sold on May 20 would be the cost of the first 6 blankets purchased. The first 5 blankets were purchased on May 3 for $20 each, and the next 10 blankets were purchased on May 17 for $24 each. Therefore, the cost of the 6 blankets sold on May 20 would be 5 x $20 + 1 x $24 = $136.

Use the Following Information to Answer the Following Questions Assuming That the Company Uses the Perpetual Inventory System, Determine