Question

The Boxwood Company sells blankets for $ 30.00 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 8 $14.00 May 10 Sale 5 May 17 Purchase 10 $17.00 May 20 Sale 4 May 23 Sale 3 May 30 Purchase 11 $23.00 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.

Answer 1

In FIFO Inventory valuation method, the inventory which is received is earlier is issued first for sales.

Hence the Closing Inventory includes those inventory which is received recently.

Date	Particulars	Units	Purchase/Issue Price	Value of Inventory	Balance
May-01	Opening Inventory	0	0	0	0
May-03	Purchases	8	$14	$112	8 Units * $14 = $112
May-10	Sales	5	$14	$70	3 Units * $14 = $42
May-17	Purchases	10	$17	$170	3 Units * $14 = $42 10 Units * $17 = $170
May-20	Sales	4	3 Units - $14 1 Units - $17	$59	9 Units * $17 = $153
May-23	Sales	3	$17	$51	6 Units * $17 = $102
May-30	Purchases	11	$23	$253	6 Units * $17 = $102 11 Units * $23 = $253
May-30	Closing Inventory	17	6 units - $17 11 Units - $23	$355	6 Units * $17 = $102 11 Units * $23 = $253

Hence the value of Closing Inventory under FIFO method is $355.