Maxell Company uses the FIFO method to assign costs to inventory and cost of goo
ID: 2560419 • Letter: M
Question
Maxell Company uses the FIFO method to assign costs to inventory and cost of goods sold. The company uses a periodic inventory system. Consider the following information:
Date
Description
# of units
Cost per unit
January 1
Beginning inventory
100
$5
June 2
Purchase
75
$4
November 5
Sales
125
What amounts would be reported as the cost of goods sold and ending inventory balances for the year?
Cost of goods sold $625; Ending inventory $175
Cost of goods sold $755; Ending inventory $225
Cost of goods sold $550; Ending inventory $250
Cost of goods sold $600; Ending inventory $200
Date
Description
# of units
Cost per unit
January 1
Beginning inventory
100
$5
June 2
Purchase
75
$4
November 5
Sales
125
Explanation / Answer
d. Cost of goods sold $600; Ending inventory $200
Explanation:
Cost of goods Sold
Begining inventory 100 units @ $ 5 = $500
From current Purchases 25 units @ $ 4 = $100
Total = $600
Ending Inventory 50 units @ $4 = $ 200