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. Recording of business transactions: Business transactions are recorded in the form of journal entries, using double entry system. In the double entry system each transaction affects at least two accounts. One or more account is debited and one or more accounts are credited for a transaction. Posting of journal entries to ledgers: Each recorded journal entry is posed into its respective ledger accounts (also known as T- account). The debit entry is posted on the debit (left) side of the account and credit is posted on the credit (right) side of the account. To post: The general entries in the ledger accounts

Question

Want to see the full answer?

Answer 1

Question

Chapter 6, Problem 4CP

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.

Recording of business transactions: Business transactions are recorded in the form of journal entries, using double entry system. In the double entry system each transaction affects at least two accounts. One or more account is debited and one or more accounts are credited for a transaction.

Posting of journal entries to ledgers: Each recorded journal entry is posed into its respective ledger accounts (also known as T- account). The debit entry is posted on the debit (left) side of the account and credit is posted on the credit (right) side of the account.

To post: The general entries in the ledger accounts

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

A company had an income of $60,000 using absorption costing for a given period. Beginning and ending inventories for that period were 13,000 units and 18,000 units, respectively. Ignoring income taxes, if the fixed overhead application rate was $3.00 per unit, what was the income using variable costing? A. $75,000. B. $60,000. C. $45,000. D. Not sufficient information to determine.

Can you solve this general accounting problem with appropriate steps and explanations?

An asset has a book value of $22,500 on December 31, Year 4. The asset has been depreciated at a straight-line rate of $5,000 per year. If the asset is sold on December 31, Year 4 for $19,000, what should the company record? • a. A loss on sale of $3,500 • b. A gain on sale of $3,500 . c. Neither a gain nor a loss is recognized . • d. A loss on sale of $1,000 e. A gain on sale of $1,000