Boxwood Company sells blankets for $60 each. The following information was taken from their inventory records for May. The company began with no 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 the company uses the perpetual inventory system, determine the gross profit for the sale on May 23 using the FIFO inventory cost method.- a. $72- b. $120- c. $108- d. $180**Explanation:**To solve this, apply the FIFO (First-In, First-Out) method. When calculating the cost of goods sold and the subsequent gross profit for the sale on May 23, consider the order in which the blankets were purchased:1. **Beginning Inventory:** None2. **May 3 Purchase**: 5 units at $20 each3. **May 10 Sale**: Sold 3 units (5 - 3 = 2 units remaining at $20)4. **May 17 Purchase**: 10 units at $24 each5. **May 20 Sale**: Sold 6 units (2 at $20, then 4 at $24)For the **May 23 Sale**, 3 units will be taken from the May 17 purchase:- Cost of May 23 Sale: 3 units at $24 = $72**Revenue from May 23 Sale:** 3 units at $60 = $180**Gross Profit Calculation:**\[ \text{Gross Profit} = \text{Revenue} - \text{Cost of Goods Sold} \]\[ \text{Gross Profit} = \$180 - \$72 = \$108 \]Correct answer: **c. $108**

Name: Boxwood Company sells blankets for $60 each. The following informatio
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Description: Boxwood Company sells blankets for $60 each. The following information was taken from their inventory records for May. The company began with no inventory on May 1.| Date | Blankets | Units | Cost ||-------|----------|-------|------|| May 3 | Purch

Total units available for sale on May 23 = 5 + 10 = 15 units Total units sold before May 23 = 3+6 =…

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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 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 gross profit for the sale of May 23 using the FIFO inventory cost method. Oa. $72 Оb. S120 Ос. S108 Od. $180

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 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 gross profit for the sale of May 23 using the FIFO inventory cost method. Oa. $72 Оb. S120 Ос. S108 Od. $180

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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