Chapter 6, Problem 10CP

To determine

Concept Introduction:

FIFO- Perpetual inventory System: FIFO (First in first out) method assumes the flow of inventory in the same order of its purchase. In other words, the oldest purchase is assumed to be sold first in order of purchases made. The FIFO method can be applied using perpetual or periodic method. In the perpetual inventory method, the inventory balance is updated after each inventory transaction.

Closing entries: The closing entries are prepared at the year end to close the temporary accounts. Temporary accounts are revenue, expenses, and drawings accounts. The balances of these temporary accounts are not carried forward to the next accounting year.

To show: The closing entries and posting into ledgers