Question

# The Boxwood Company sells blankets for \$30 each. The following was taken from the inventory records...

The Boxwood Company sells blankets for \$30 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 23 \$12 10 Sale 9 17 Purchase 32 \$14 20 Sale 16 23 Sale 4 30 Purchase 24 \$15

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.

a.\$64

b.\$168

c.\$56

d.\$196

a) \$64

Inventory Valuation under FIFO Method

 Date Receipt or sales Units Rate per unit Closing Balance May 3 Receipt 23 \$12 23 units @\$12 per unit May 10 Sales 9 \$12 14 units @\$12 per unit May 17 Receipt 32 \$14 14 units @\$12 per unit 32 units @\$14 per unit May 20 Sales 14 2 \$12 \$14 30 units @\$14 per unit May 23 Sales 4 \$14 26 units @\$14 per unit May 30 Receipts 24 \$15 26 units @\$14 per unit 24 units @\$15 per unit

Calculation of Gross profit on sale of May 23

Cost of units sold on May 23 = 4 units @\$14 per unit

= \$56

Selling price per unit= \$30

Gross profit for sale of May 23 = Sales- Cost of Goods sold

= (4 units*\$30) - \$56

= \$120 - \$56

= \$64

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