Final answer:
The question focuses on the use of the FIFO inventory method for calculating cost of goods sold and remaining inventory in a business setting.
Explanaton:
The question relates to the calculation of cost of goods sold and inventory valuation using the FIFO (First-In, First-Out) method in accounting, specifically within a business context. In January, Waterway Company has to apply the FIFO method to determine the costs associated with their product sales for that month. FIFO assumes that the oldest items in inventory are sold first, which impacts the cost of goods sold and the remaining inventory value on the balance sheet. Correct application of this inventory costing method is crucial for accurate financial reporting and can affect the company's gross profit and net income.