Question

Pearl Company has a perpetual inventory system. The company uses the FIFO method to assign costs to inventory and cost of goods sold. Consider the following information:


Date Description Units Cost per unit
April 1 Beginning inventory 1,000 $5
April 2 Purchase 750 $4
April 5 Sales 1,250

What amounts would be reported as cost of goods sold and ending inventory for April?

A) Cost of goods sold $6,250; Ending inventory $1,750

B) Cost of goods sold $7,550; Ending inventory $2,250

C) Cost of goods sold $5,500; Ending inventory $2,500

D) Cost of goods sold $6,000; Ending inventory $2,000

Answer

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