Question

Altira Corporation provides the following information related to its merchandise inventory during the month of August 2021: Aug.1 Inventory on hand—3,200 units; cost $6.50 each. 8 Purchased 16,000 units for $6.70 each. 14 Sold 12,800 units for $13.20 each. 18 Purchased 9,600 units for $6.80 each. 25 Sold 11,800 units for $12.20 each. 28 Purchased 5,200 units for $5.80 each. 31 Inventory on hand—9,400 units. Required: Using calculations based on a periodic inventory system, determine the inventory balance Altira would report in its August 31, 2021, balance sheet and the cost of goods sold it would report in its August 2021 income statement using each of the following cost flow

Answer 1

Answer:

August 2021:

                                                                                             Total Cost

Aug.1 Inventory on hand—3,200 units; cost $6.50 each.  $ 20,800

8 August  Purchased 16,000 units for $6.70 each.      $ 107200

14 August Sold 12,800 units for $13.20 each.             $ 165600

18 August  Purchased 9,600 units for $6.80 each.  $ 65,280

25 August Sold 11,800 units for $12.20 each.     $ 143,960

28 August Purchased 5,200 units for $5.80 each.  $ 30,160

31 August  Inventory on hand—9,400 units.

FIFO Ending Inventory $58,720

5,200 units for $ 30,160

4,200 units for $6.80 each.  $ 28,560

FIFO Cost OF Goods Sold

=$ 20,800 + $ 107,200+ $ 65,280+ $ 30,160 - $58,720= 223,400-$58,720 = $ 164,720

LIFO Ending Inventory $ 62340

3,200 units; cost $6.50 each.  $ 20,800

6,200 units for $6.70 each = $ 41540

LIFO Cost OF Goods Sold

=$ 20,800 + $ 107,200+ $ 65,280+ $ 30,160 -$ 62340= 223,400-$ 62340=$ 161,100

Average Cost Ending Inventory = $223,400/ 34,000= 6.570

9,400* 6.570= $ 61,763

Average Cost of Goods Sold = (Total Units - Ending Unit )* 6.57=

                                                            = $ 223,380