Maxell Company Uses the Periodic FIFO Method to Assign Costs

question 20

Multiple Choice

Maxell Company uses the periodic FIFO method to assign costs to inventory and cost of goods sold.Given the following information,what would be reported as the cost of goods sold and ending inventory balances for the period? $$\begin{array} { | c | r | r | } \hline \text { Date}& \text {Transaction } & \text { of units } & \text { Cost per unit } \\\hline \text { Jaruary 1}& \text {Begirning balance } & 100 & \$ 5 \\\hline \text { Jaruary2} &\text { Purchase } & 75 & \$ 4 \\\hline \text { Jaruaary 5} &\text{Sale } & 75 & \\\hline \text { Jaruary 6 } &\text { Sale } & 50 & \\\hline\end{array}$$

• A)COGS = $625,ending inventory = $175
• B)COGS = $575,ending inventory = $225
• C)COGS = $550,ending inventory = $250
• D)COGS = $600,ending inventory = $200

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Definitions:

Closing

The process of finalizing accounts at the end of an accounting period, transferring temporary account balances to permanent ones.

Zeros Out

The process of adjusting an account balance to zero, often used in the context of budgeting or closing temporary accounts at the end of an accounting period.

Balance Columns

Columns in an account or ledger used to record the debit and credit balances.

Solvency

Indicates the ability of a company or individual to meet long-term financial obligations; solvency is crucial for staying operational and avoiding bankruptcy.