The Boxwood Company sells blankets for $ 37.00 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1. Date Product Z Units Cost May 01 Purchase 7 $15.00 May 10 Sale 5 May 17 Purchase 10 $16.00 May 20 Sale 8 May 23 Sale 3 May 30 Purchase 12 $24.00 Assuming that the company uses the perpetual inventory system, determine the cost of goods sold for the sale of May 20 using the FIFO inventory cost method.

$128

Explanation:

The FIFO inventory system means first in , first out. It means that it is the first purchased inventory that is the first to be sold.

Under the perpetual system, the cost of goods sold Under the FIFO system would be taken from the most recent inventory purchase prior to the sale.

The most recent inventory purchase prior to the sale occurred on the 17th. The price at which the inventory was purchased on the 17th would be used to calculate the cost of goods sold

So the cost of goods sold = $16.00 × 8 = $128

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