Concept explainers
(a)
Perpetual Inventory System: Perpetual Inventory System refers to the inventory system that maintains the detailed records of every inventory transactions related to purchases and sales on a continuous basis. It shows the exact on-hand-inventory at any point of time.
Inventory cost flow: It refers to the flow (movement) of inventory when it is purchased or sell by the business organization.
The various inventory cost flow methods are:
- First-in, first-out (FIFO)
- Last in, first-out (LIFO)
- Average-cost
FIFO method: In FIFO method, those goods are sold first which are purchased first by the business organization.
LIFO method: In LIFO method, those goods are sold first which are purchased in last by the business organization
Average-cost method: In average-cost method, the value of inventory is calculated by the average of cost of goods sold which are available for the sale purpose for that period.
To determine: Prepare inventory schedule under perpetual system by FIFO method.
(b)
Prepare inventory schedule under perpetual system by LIFO method
(C)
Prepare inventory schedule under perpetual system by moving-average cost.

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