Question Content AreaBoxwood Company sells blankets for $37 each. The following information was taken from the inventory records during May. The company had no beginning inventory on May 1. Boxwood uses a perpetual inventory system.DateBlanketsUnitsCostMay 3 Purchase9$1410 Sale3 17 Purchase11$1720 Sale7 23 Sale3 30 Purchase10$19Determine the cost of goods sold for the sale of May 20 using the FIFO inventory costing method.a. $116b. $203c. $161d. $101

The objective of the question is to determine the cost of goods sold (COGS) for the sale of May 20 using the FIFO (First-In, First-Out) inventory costing method. In FIFO, the oldest inventory items are recorded as sold first.First, let's look at the inventory transactions before May 20. On May 3, 9 blankets were purchased at a cost of $14 each, and on May 10, 3 blankets were sold. This leaves 6 blankets from the May 3 purchase. On May 17, 11 more blankets were purchased at a cost of $17 each.On May 20, 7 blankets were sold. According to the FIFO method, we sell the oldest items first. So, the 6 blankets remaining from the May 3 purchase will be sold first, and then 1 blanket from the May 17 purchase will be sold.The cost of the 6 blankets from the May 3 purchase is 6 blankets * $14/blanket = $84. The cost of the 1 blanket from the May 17 purchase is 1 blanket * $17/blanket = $17.Adding these two amounts together, the total cost of goods sold for the sale of May 20 is $84 + $17 = $101.The cost of goods sold for the sale of May 20 using the FIFO inventory costing method is $101. This is calculated by selling the oldest inventory items first, which in this case were 6 blankets from the May 3 purchase and 1 blanket from the May 17 purchase.

Answered: Question Content Area Boxwood Company…

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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Boxwood Company sells blankets for $37 each. The following information was taken from the inventory records during May. The company had no beginning inventory on May 1. Boxwood uses a perpetual inventory system.

Date Blankets Units Cost

May 3     Purchase 9 $14

10     Sale 3

17     Purchase 11 $17

20     Sale 7

23     Sale 3

30     Purchase 10 $19

Determine the cost of goods sold for the sale of May 20 using the FIFO inventory costing method.

a. $116

b. $203

c. $161

d. $101