Apply the three inventory costing methods to compute ending inventory and cost of goods sold under a perpetual inventory system.

- The three inventory costing methods are specific identification; first-in, first-out (FIFO); and weighted average cost.

- The specific identification method determines the cost of ending inventory and the cost of goods sold based on the identification of the actual units sold and the units remaining in inventory.

- The other two inventory costing methods allocate cost of goods available for sale between ending inventory and cost of goods sold using the following process.

- Step 1: Calculate the cost of goods available for sale immediately prior to any sales transaction.

- Step 2: Apply the inventory costing method to determine ending inventory and cost of goods sold.

- Step 3: Repeat steps 1 and 2 for all inventory transactions during the period. The sum of the cost of goods sold computed in step 2 is the cost of goods sold for the period. Ending inventory is the amount computed during the final application of step 2 for the period.