Question

Exercise 8-13 Inventory cost flow methods; periodic system [LO8-1, 8-4] Altira Corporation uses a periodic inventory system. The following information related to its merchandise inventory during the month of August 2018 is available: Aug.1 Inventory on hand—10,500 units; cost $8.40 each. 8 Purchased 29,000 units for $7.40 each. 14 Sold 20,500 units for $13.90 each. 18 Purchased 15,500 units for $6.90 each. 25 Sold 19,500 units for $12.90 each. 31 Inventory on hand—15,000 units. Required: Determine the inventory balance Altira would report in its August 31, 2018, balance sheet and the cost of goods sold it would report in its August 2018 income statement using each of the following cost flow methods: rev: 10_27_2017_QC_CS-106810

Answer 1

FIFO	Cost of Goods Available for Sale			Cost of Goods sold-Periodic FIFO			Ending inventory-Periodic FIFO
	# of units	Cost per unit	Total	# of units	Cost per unit	Cost of goods sold	# of units	Cost per unit	Ending Inventory
Beginning Inventory	10500	8.40	88200	10500	8.40	88200	0	8.40	0
Purchases:
August 8	29000	7.40	214600	29000	7.40	214600	0	7.40	0
August 18	15500	6.90	106950	500	6.90	3450	15000	6.90	103500
Total	55000		409750	40000		306250	15000		103500
LIFO	Cost of Goods Available for Sale			Cost of Goods sold-Periodic LIFO			Ending inventory-Periodic LIFO
	# of units	Cost per unit	Total	# of units	Cost per unit	Cost of goods sold	# of units	Cost per unit	Ending Inventory
Beginning Inventory	10500	8.40	88200	0	8.40	0	10500	8.40	88200
Purchases:
August 8	29000	7.40	214600	24500	7.40	181300	4500	7.40	33300
August 18	15500	6.90	106950	15500	6.90	106950	0	6.90	0
Total	55000		409750	40000		288250	15000		121500
Average cost	Cost of Goods Available for Sale			Cost of Goods sold			Ending inventory
	# of units	Cost per unit	Total	# of units	Cost per unit	Cost of goods sold	# of units	Cost per unit	Ending Inventory
Beginning Inventory	10500	8.40	88200
Purchases:
August 8	29000	7.40	214600
August 18	15500	6.90	106950
Total	55000	7.45	409750	40000	7.45	298000	15000	7.45	111750
Note:
Average cost = 409750/55000 = $7.45