Tetra Company purchased 3,400 units of inventory that cost $9.00 each on January 1, Year 1. An additional 4,400 units of inventory were purchased on January 12, Year 1 at a cost of $5.60 each. Tetra Company sold 5,400 units of inventory on January 20, Year 1. Assuming that Tetra Co. uses the perpetual inventory method and a FIFO cost flow method, how would the entry to recognize the cost of goods sold affect the financial statements?

Multiple Choice

• Increase cost of goods sold and decrease inventory by 41,800
• Decrease cost of goods sold and increase inventory by $41,900
• Increase inventory and increase cost of goods sold by $41,800
• Increase inventory and increase cost of goods sold by 41,900