Chapter 6, Problem P6.29APGA

To determine

Concept Introduction:

Perpetual Inventory System: The perpetual inventory system records and updates the inventory after each and every transaction. The inventory balance is updated after each transaction and it is kept up to date at every time.

FIFO method: FIFO Stands for First In First Out. Under this method, the units purchased first are assumed to be sold first and cost of goods sold is calculated accordingly. The ending inventory in the method includes the latest units purchased.

LIFO method: LIFO Stands for Last In First Out. Under this method, the latest units purchased are assumed to be sold first and cost of goods sold is calculated accordingly. The ending inventory in the method includes the oldest units purchased.

Weighted Average method: Under this method, the cost per unit of the inventory is calculated as weighted average cost per unit and the cost of goods sold and inventory is calculated with the help of weighted average cost per unit.

Requirement-1:

To prepare: The Perpetual Inventory record for the merchandise inventory using the FIFO inventory costing method

To determine

Requirement-2:

To prepare: The Perpetual Inventory record for the merchandise inventory using the LIFO inventory costing method

To determine

Requirement-3:

To prepare: The Perpetual Inventory record for the merchandise inventory using the Weighted Average inventory costing method

To determine

Requirement-4:

To determine: The Cost of Goods Sold using the FIFO, LIFO and Weighted Average inventory costing methods

To determine

Requirement-5:

To determine: The Gross Profit using the FIFO, LIFO and Weighted Average inventory costing methods

To determine

Requirement-6:

To identify: The method with the highest profit