Use the information below to answer the following question. 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 3 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 ending inventory value for the month of May using the FIFO inventory cost method.

Boxwood Company

Determination of the Ending Inventory, using the FIFO method:

Date                      Blankets Units       Unit Cost   Total cost

May 17 Purchase              3                   24                $72

May 30 Purchase           10                    30             $300

Total cost of Ending Inventory = $372 ($72 + 300)

Explanation:

a) Inventory Records during May:

Date                      Blankets Units       Cost

May 3 Purchase              5                  $20

May 10 Sale                     3                            

May 17 Purchase            10                    24

May 20 Sale                    6

May 23 Sale                     3

May 30 Purchase           10                    30

May 31 Ending Balance  13

FIFO method of costing inventory is based on the assumption that a business entity sells older stock of goods first before the latest goods brought into the store.  FIFO means First-in, First-out.  It is one of the methods of costing inventory.  Others include LIFO, Weighted Average, and Specific Identification.

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