FIFO inventory method journal entry on January 31 to record cost of goods sold and adjust the inventory under the given scenario is:

FIFO inventory method journal entry on January 31 to record cost of goods sold and adjust the inventory under the given scenario is:

• A. Debit Inventory for $14,000; Credit Cost of Goods Sold for $14,000
• B. Debit Cost of Goods Sold for $14,000; Credit Inventory $14,000
• C. Debit Cost of Goods Sold for $13,500; Credit Inventory for $13,500
• D. Debit Inventory for $13,500; Credit Cost of Goods Sold for $13,500

Answer: (B)

Transferring the cost of items sold from inventory to expense is how FIFO affects the journal entry when recording COGS. When goods are sold, you move their cost out of Inventory and into Cost of Goods Sold, so the entry debits COGS and credits Inventory for the cost of those goods. In this scenario, the cost to be recognized as COGS on January 31 is 14,000, so the correct entry is to debit Cost of Goods Sold for 14,000 and credit Inventory for 14,000. FIFO determines which costs were used to satisfy the sale (oldest costs first), but the Journal Entry amount reflects the actual cost of the goods sold, not the specific items. The other options would either increase assets by debiting Inventory, or apply the expense on the wrong side, or use an incorrect amount that doesn’t match the actual cost of goods sold.

Transferring the cost of items sold from inventory to expense is how FIFO affects the journal entry when recording COGS. When goods are sold, you move their cost out of Inventory and into Cost of Goods Sold, so the entry debits COGS and credits Inventory for the cost of those goods. In this scenario, the cost to be recognized as COGS on January 31 is 14,000, so the correct entry is to debit Cost of Goods Sold for 14,000 and credit Inventory for 14,000. FIFO determines which costs were used to satisfy the sale (oldest costs first), but the Journal Entry amount reflects the actual cost of the goods sold, not the specific items. The other options would either increase assets by debiting Inventory, or apply the expense on the wrong side, or use an incorrect amount that doesn’t match the actual cost of goods sold.