Boxwood Company sells blankets for $39 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 03 Purchase 5 $16 10 Sale 4 17 Purchase 9 $17 20 Sale 4 23 Sale 2 30 Purchase 9 $24 Assuming that the company uses the perpetual inventory system, determine the ending inventory value for the month of May using the FIFO inventory cost method. a. $173 b. $216 c. $284 d. $366 PreviousNext

the ending inventory value for the month of May using the FIFO inventory cost method c. $284

Explanation:

FIFO Inventory System sell the Older Inventory Acquired First Followed by the  Recent Acquired Inventory

May 3

Inventory : 5 unit × $16 = $80

May 10

Inventory : 1 unit × $16  = $16

May 17

Inventory : 1 unit × $16  = $16

                 9 units × $17= $153

Total                               =$169

May 20

Inventory : 6 units × $17 =$102

May 23

Inventory : 4 units × $17  =$68

May 30

Inventory : 4 units × $17  =$68

                  9 units × $24 =$216

Total                                 =$284

The ending inventory value for the month of May using the FIFO inventory cost method: c. $284

Explanation:

The FIFO is a method used to account value for inventory. Under the method, the first item of inventory purchased is the first one sold.

1. May 1,  No inventory

2. May 03, Purchased 5 units, $16 per unit  

Inventory: $16 x 5 = $80

3. May 10, Sale 4 units

Cost of good sold = 4 x $16 = $64

The inventory = $80 - $64 = $16 (1 unit, $16 per unit)

4. May 17, Purchased 9 units, $17 per unit

The inventory: $169

1 units, $16 per unit, total $16

9 units $17 per unit, total $153

5. May 20, Sold 4 units

Cost of goods sold = 1 x $16 + 3 x $17 = $67

The inventory: 6 units $17 per unit, total $102

6. May 23, Sold 2 units

Cost of goods sold = 2 x $17 = $34

The inventory: 4 units $17 per unit, total $68

7. May 30, Purchased 9 units, $24 per unit

Inventory: $284

4 units $17 per unit, total $68

9 units $24 per unit, total $216