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