Question

The 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 Gross Profit for the month of May using the LIFO cost method.

a.$348

b.$444

c.$356

d.$452

Answer 1

Option b $444 is correct answer.

Explanation:-

1. Determination of the Cost of Goods Sold:-
Boxwood Company
Schedule of Cost of Goods Sold
Last In First Out (LIFO) Method
For the Month Ended May 31
	Purchases			Cost of Goods Sold			Inventory
Date	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost	Quantity	Unit Cost	Total Cost
May 3	5	$                                20	$                 100				5	$                        20	$              100
May 10				3	$               20	$                    60	2	$                        20	$                40
May 17	10	$                                24	$                 240				2	$                        20	$                40
							10	$                        24	$              240
May 20				6	$               24	$                  144	2	$                        20	$                40
							4	$                        24	$                96
May 23				3	$               24	$                    72	2	$                        20	$                40
							1	$                        24	$                24
May 30	10	$                                30	$                 300				2	$                        20	$                40
							1	$                        24	$                24
							10	$                        30	$              300
Total				12	$               68	$                  276
Determination of the ending inventory cost under LIFO as on May 31:-
Schedule of Ending Inventory
Last In First Out (LIFO) Method
		Ending inventory
		Quantity	Unit Cost	Total Cost
		2	$                    20	$                 40
		1	$                    24	$                 24
		10	$                    30	$               300
	Total	13		364
2. Determination of the total sales, the total cost of goods sold, and the gross profit from sales for the period.
Total Sales
	Sales
Date	Quantity	Selling Price per unit	Total Sales
May 10	3	$                                60	$                 180
May 20	6	$                                60	$                 360
May 23	3	$                                60	$                 180
Total	12		720
Total Cost of Goods sold
	Cost of Goods sold (from sub part 1.)				$             276
3. Gross profit for the sales period:-
	Total Sales		$                 720
Less:	Total Cost of Goods sold		$                 276
	Gross profit for the the month of May		$                 444

Feel free to ask any clarification, if required. Please provide feedback by thumbs up, if satisfied. It will be highly appreciated. Thank you.