Match the following sentences to the inventory cost flow method they describe. FIFO LIFO Average Cost Rarely used with a perpetual inventory system Widely used for tax purposes. Produces the highest gross profit when costs are decreasing Produces the highest ending inventory when costs are increasing Does not follow the physical flow of goods in most cases. Cost of the latest purchases are assigned to ending inventory. Which of the following companies would be more likely to use the specific identification inventory costing method? Gorden's Jewelers Lowe's Best Bury Wal-Mart Addison, Inc. uses a perpetual inventory system. The following is information about one inventory item for the month of September: If Addison uses FIFO, the cost of the ending merchandise inventory on September 30 is $800 $650 $750 $700 If Addison uses LIFO, the cost of the ending merchandise inventory on September 30 is $800 $650 $750 $700 When using a perpetual inventory system, the journal entry to record the cost of merchandise sold is debit Cost of Merchandise Sold; credit Sales debit Cost of Merchandise Sold; credit Merchandise Inventory debit Merchandise Inventory; credit Cost of Merchandise Sold No journal entry is made to record the cost of merchandise sold