Adam IncUses a Perpetual Inventory System and Has the Following Data

question 183

Multiple Choice

Adam Inc.uses a perpetual inventory system and has the following data for January:
$$\begin{array} { r l r } \text { Jan. } 1 & \text { On hand, } 10 \text { units } @ \$ 2 \text { each } & \$ 20 \\4 & \text { Sold } 8 \text { units } @ \$ 10 \text { each } & 80 \\22 & \text { Purchased } 50 \text { units } @ \$ 4 \text { each } & 200 \\26 & \text { Sold } 48 \text { units } @ \$ 10 \text { each } & 480\end{array}$$
- If Adam uses the FIFO method,how much is ending inventory on January 31?

• A)$8
• B)$12
• C)$16
• D)$40

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Definitions:

Liabilities With Priority

Obligations that are given preferential treatment over other liabilities, often paid first in a liquidation scenario.

Total Assets

The cumulative total of all resources owned by an entity, including cash, investments, property, and other assets that have economic value.

Liabilities With Priority

Financial obligations that are given precedence over other debts of a company in the event of a liquidation or bankruptcy.

Unsecured Creditors

Creditors who have lent money without taking any assets as security, hence they bear a higher risk compared to secured creditors.