Question

Perpetual Inventory Using LIFO - Determine the cost of goods sold for each sale and the inventory balance after each sale.

A. Exhibit 4 format
B. FIFO method
C. Weighted average method
D. LIFO method

Answer 1

Perpetual inventory using LIFO involves determining the cost of goods sold for each sale and the inventory balance after each sale using specific methods such as Exhibit 4 format, FIFO, weighted average, and LIFO.

Step-by-step explanation:

In the context of perpetual inventory, the cost of goods sold refers to the cost of the inventory items that were sold during a specific time period. The inventory balance, on the other hand, refers to the value of the remaining inventory items at the end of the time period.

A. Exhibit 4 format: This format provides a detailed breakdown of the cost of goods sold for each sale and the inventory balance after each sale.

B. FIFO method: This method assumes that the first items purchased are the first ones sold, thus the cost of goods sold will be based on the prices of the oldest inventory items.

C. Weighted average method: This method calculates the average cost for all inventory items, and the cost of goods sold is based on this average cost.

D. LIFO method: This method assumes that the last items purchased are the first ones sold, thus the cost of goods sold will be based on the prices of the most recent inventory items.