Question

Required information

Altira Corporation uses a perpetual inventory system. The following transactions affected its merchandise inventory during the month of August 2018:

Aug.1	Inventory on hand—3,900 units; cost $8.00 each.
8	Purchased 19,500 units for $7.40 each.
14	Sold 15,600 units for $13.90 each.
18	Purchased 11,700 units for $6.60 each.
25	Sold 14,600 units for $12.90 each.
31	Inventory on hand—4,900 units.

3. 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 the Average cost method. (Round "Average Cost per Unit" to 2 decimal places.)

Answer 1

Solution:

Perpetual Weighted Average Method

Perpetual Weighted Average	Goods Purchased			Cost of Goods Sold			Inventory Balance
	# of units	Unit Cost	Cost per unit	# of units	Cost per unit	Cost of goods sold	Total Cost of Goods (a)	Total Available Units (b)	Unit Average Cost (a/b)
Beginning Inventory Aug.1							$31,200.00	3900	$8.00
Purchases Aug. 8	19500	$7.40	$144,300.00				$31,200.00	3900
							$144,300.00	19500
							$175,500.00	23400	$7.50
Sales Aug.14				15600	$7.50	$117,000	$58,500.00	7800	$7.50
Purchases Aug. 18	11700	$6.60	$77,220.00				$58,500.00	7800
							$77,220.00	11700
							$135,720.00	19500	$6.96
Sales Aug.25				14600	$6.96	$101,616	$34,104.00	4900	$6.96
TOTAL						$218,616

Cost of Goods Sold = $218,616

Ending Inventory = $34,104

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