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.
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) $250
B) $180
C) $196
D) $204

Question

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.
 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) $250 
B) $180 
C) $196 
D) $204

Quizplus · Accepted Answer

Using the FIFO method, we assume that the first items purchased are the first items sold. Based on the inventory records, the cost of the first 3 blankets sold on May 20 would be:
3 blankets x $40 (cost per blanket) = $120

Therefore, the cost of merchandise sold for the sale of May 20 would be:
$120 (cost of first 3 blankets sold) + $28 (cost of one additional blanket sold) = $148

Note that we do not include the cost of any remaining blankets in inventory as they were not sold.

Use the Following Information to Answer the Following Questions