Chapter 6, Problem 6.5SE

(1)

To determine

Periodic Inventory System: It is a system in which the inventory is updated in the accounting records on a periodic basis such as at the end of each month, quarter or year. In other words, it is an accounting method which is used to determine the amount of inventory at the end of each accounting period.

In Last-in-First-Out method, the cost of last purchased items are sold first. The value of the closing stock consists the initial purchased items.

To Prepare: The perpetual inventory record under LIFO method.

(2)

To determine

To Record: The entries of merchandise inventory purchased and sold.