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

Question

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

Quizplus · Accepted Answer

Under FIFO, the oldest costs are assigned to COGS first. The sales total 125 units (75 + 50). The first 100 units are from the beginning balance at $5 each, and the next 25 units are from the January 2 purchase at $4 each. COGS = (100 x $5) + (25 x $4) = $600. Ending inventory is the remaining 50 units from the January 2 purchase at $4 each, totaling $200.

Maxell Company Uses the Periodic FIFO Method to Assign Costs