Use the information below to answer the following question The Boxwood Company s

Question

Use the information below to answer the following 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 May1 Blankets Units 5 3 10 6 3 10 Cost $20 Date Purchase Sale Purchase Sale Sale Purchase May 3 10 17 20 23 30 $24 $30 Assuming that the company uses the perpetual inventory system, determine the cost of merchandise sold for the sale of May 20 using the LIFO inventory cost method a. $144 ob·$180 Oc. $120 Od. $136

Explanation / Answer

(1) Cost of merchandise sold on May 20 = Purchase on May 17 (Based on LIFO)

Cost of merchandise sold = 6 * $24 = $144 (Option-a)

(2) False - Accounts Receivable is debited which is the selling price

(3) Social Security Tax = 6% of $16,000 = $960

Medicare = 1.5% of $16,000 = $240

Federal Tax witheld = $4,000

Salaries Payable = $16,000 - $960 - $240 - $4,000 = $10,800 (Option-c)

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