PERPETUAL INVENTORY SYSTEM A perpetual inventory system seeks to track inventory levels in real-time throughout the entire inventory cycle (purchase, storage, sale, replace). GAAP allows companies to choose from three different inventory cost flow methods to track these inventory amounts First-In-First-Out (FIFO): Assumes that the oldest purchased inventory items are sold first Last-In-First-Out (LIFO): Assumes that the newest purchased inventory items are sold first. Average Cost Method: Uses a weighted average cost calculation to determine COGS Technically, there is a fourth method called "Specific Identification" that assumes that the company can easily identify exactly which items are being sold When completing problems in this chapter, you must pay close attention to how the problem is constructed. For instance, some problems are setup like the one below where a beginning inventory level is given and then a series of inventory purchases throughout the month. These types of problems can easily be solved using a basic chart like the one shown below Instructions: Use the information below to solve determine COGS and Ending Inventory for each of the 3 inventory methods (FIFO, LIFO and Avg. Cost). Start by just reviewing the FIFO completed example. Then, complete the LIFO problem on your own