Question

Altira Corporation provides the following information related to its merchandise inventory during the month of August 2021:

Aug.1	Inventory on hand—2,000 units; cost $5.30 each.
8	Purchased 8,000 units for $5.50 each.
14	Sold 6,000 units for $12.00 each.
18	Purchased 6,000 units for $5.60 each.
25	Sold 7,000 units for $11.00 each.
28	Purchased 4,000 units for $5.80 each.
31	Inventory on hand—7,000 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 methods.

1.

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 the FIFO method. (Round cost per unit to 2 decimal places.)

FIFO Cost of Goods Available for Sale Cost of Goods Sold - Periodic FIFO Ending Inventory - Periodic FIFO # of units Cost per unit Cost of Goods Available for Sale # of units sold Cost per unit Cost of Goods Sold # of units in ending inventory Cost per unit Ending Inventory Beginning Inventory 2,000 $5.30 $10,600 $5.30 $5.30 $0 Purchases: August 8 8,000 $5.50 44,000 $5.50 $5.50 0 August 18 6,000 $5.60 33,600 $5.60 $5.60 August 28 4,000 $5.80 23,200 $5.80 $5.80 Total 20,000 $111,400 0 $0 0 $0

2.

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 the LIFO method. (Round cost per unit to 2 decimal places.)

LIFO Cost of Goods Available for Sale Cost of Goods Sold - Periodic LIFO Ending Inventory - Periodic LIFO # of units Cost per unit Cost of Goods Available for Sale # of units sold Cost per unit Cost of Goods Sold # of units in ending inventory Cost per unit Ending Inventory Beginning Inventory 2,000 $5.30 $10,600 $5.30 $0 $5.30 Purchases: August 8 8,000 $5.50 44,000 $5.50 $5.50 August 18 6,000 $5.60 33,600 $5.60 $5.60 0 August 28 4,000 $5.80 23,200 $5.80 $5.80 0 Total 20,000 $111,400 0 $0 0 $0

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 the Average cost method. (Round cost per unit to 2 decimal places.)

Average Cost Cost of Goods Available for Sale Cost of Goods Sold - Average Cost Ending Inventory - Average Cost # of units Unit Cost Cost of Goods Available for Sale # of units sold Average Cost per Unit Cost of Goods Sold # of units in ending inventory Average Cost per unit Ending Inventory Beginning Inventory 2,000 $5.30 $10,600 Purchases: August 8 8,000 $5.50 44,000 August 18 6,000 $5.60 33,600 August 28 4,000 $5.80 23,200 Total 20,000 $111,400 $0 $0

• LIFO

Answer 1

1)

FIFO	Cost of Goods Available for Sale			Cost of Goods Sold - Periodic FIFO			Ending Inventory - Periodic FIFO
	# of units	Cost per unit	Cost of Goods Available for Sale	# of units sold	Cost per unit	Cost of Goods Sold	# of units in ending inventory	Cost per unit	Ending Inventory
Beginning Inventory	2000	$5.30	$10600	2000	$5.30	$10600	0	$5.30	$0
Purchases:
August 8	8000	$5.50	44000	8000	$5.50	44000	0	$5.50	0
August 18	6000	$5.60	33600	3000	$5.60	16800	3000	$5.60	16800
August 28	4000	$5.80	23200	0	$5.80	0	4000	$5.80	23200
Total	20000		$111400	13000		$71400	7000		$40000

Ending inventory= 7000 units

Total sales units= Total units-Ending inventory

= 20000-7000= 13000 units

2)

LIFO	Cost of Goods Available for Sale			Cost of Goods Sold - Periodic LIFO			Ending Inventory - Periodic LIFO
	# of units	Cost per unit	Cost of Goods Available for Sale	# of units sold	Cost per unit	Cost of Goods Sold	# of units in ending inventory	Cost per unit	Ending Inventory
Beginning Inventory	2000	$5.30	$10600	0	$5.30	$0	2000	$5.30	$10600
Purchases:
August 8	8000	$5.50	44000	3000	$5.50	16500	5000	$5.50	27500
August 18	6000	$5.60	33600	6000	$5.60	33600	0	$5.60	0
August 28	4000	$5.80	23200	4000	$5.80	23200	0	$5.80	0
Total	20000		$111400	13000		$73300	7000		$38100

3)

Average Cost	Cost of Goods Available for Sale			Cost of Goods Sold - Average Cost			Ending Inventory - Average Cost
	# of units	Unit Cost	Cost of Goods Available for Sale	# of units sold	Average Cost per Unit	Cost of Goods Sold	# of units in ending inventory	Average Cost per unit	Ending Inventory
Beginning Inventory	2000	$5.30	$10600
Purchases:
August 8	8000	$5.50	44000
August 18	6000	$5.60	33600
August 28	4000	$5.80	23200
Total	20000		$111400	13000	$5.57	$72410	7000	$5.57	$38990

Average cost per unit= Total cost of goods available for sale/Total units

= $111400/20000= $5.57 per unit