Question

The Boxwood Company sells blankets for $ 39.00 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 10 $16.00 May 10 Sale 5 May 17 Purchase 11 $18.00 May 20 Sale 6 May 23 Sale 2 May 30 Purchase 8 $23.00 Assuming that the company uses the perpetual inventory system, determine the cost of goods sold for the sale of May 20 using the LIFO inventory cost method.

Answer 1

Answer: $108

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Under the last-in, first-out method (LIFO), you assume that the last item purchased is also the first one sold. Means, merchandise sold to customers have come from the most recent purchases.

The most recent purchase as of May 20 is on May 17. On May 17, units were purchased at a cost of $18 per unit

So,

Cost of goods sold for the sale of May 20 = 6 units x $18 = $108