Question

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—5,000 units; cost $7.90 each. 8 Purchased 22,000 units for $6.70 each. 14 Sold 16,000 units for $13.20 each. 18 Purchased 12,000 units for $6.20 each. 25 Sold 15,000 units for $12.20 each. 31 Inventory on hand—8,000 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:

Answer 1

FIFO	Cost of Goods Available for Sale			Cost of Goods Sold			Ending Inventory - Periodic FIFO
	# of units	Cost per unit	Total	# of units	Cost per unit	Total	# of units	Cost per unit	Total
Beginning Inventory	5000	7.9	39500	5000	7.9	39500
Purchases:
8-Aug	22000	6.7	147400	22000	6.7	147400
18-Aug	12000	6.2	74400	4000	6.2	24800	8000	6.2	49600
Total	39000		261300	31000		211700	8000		49600
LIFO	Cost of Goods Available for Sale			Cost of Goods Sold			Ending Inventory - Periodic LIFO
	# of units	Cost per unit	Total	# of units	Cost per unit	Total	# of units	Cost per unit	Total
Beginning Inventory	5000	7.9	39500				5000	7.9	39500
Purchases:
8-Aug	22000	6.7	147400	19000	6.7	127300	3000	6.7	20100
18-Aug	12000	6.2	74400	12000	6.2	74400
Total	39000		261300	31000		201700	8000		59600
Weighted Average	Cost of Goods Available for Sale			Cost of Goods Sold			Ending Inventory - Periodic Weighted Average
	# of units	Cost per unit	Total	# of units	Cost per unit	Total	# of units	Cost per unit	Total
Beginning Inventory	5000	7.9	39500
Purchases:
8-Aug	22000	6.7	147400
18-Aug	12000	6.2	74400
Total	39000		261300	31000	6.7	207700	8000	6.7	53600