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—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:

FIFO

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 10,500 $8.40 $88,200 10,500 $8.40 $88,200 $8.40 $0 Purchases: August 8 29,000 $7.40 214,600 29,000 $7.40 214,600 $7.40 0 August 18 15,500 $6.90 106,950 500 $6.90 3,450 15,000 $6.90 103,500 Total 55,000 $409,750 40,000 $306,250 15,000 $103,500

LIFO

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 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 10,500 $8.40 $88,200 $8.40 $0 $8.40 Purchases: August 8 29,000 $7.40 214,600 24,500 $7.40 181,300 4,500 $7.40 33,300 August 18 15,500 $6.90 106,950 15,500 $6.90 106,950 $6.90 0 Total 55,000 $409,750 40,000 $288,250 4,500 $33,300

Average Cost

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.)

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 10,500 $8.40 $88,200 Purchases: August 8 29,000 $7.40 214,600 August 18 15,500 $6.90 106,950 Total 55,000 $409,750 40,000 $7.45 $298,000 15,000 $7.45 $111,750

Answer 1

Cost of goods available for sale

Date	Explanation	Units	Unit cost	Total cost
Aug. 1	Beginning inventory	10,500	$8.40	88,200
Aug. 8	Purchase	29,000	$7.40	214,600
Aug. 18	Purchase	15,500	$6.90	106,950
	Total	55,000		$409,750

FIFO Method

Step 1. Ending inventory

Date	Units	Unit cost	Total cost
Aug. 25	15,000	$6.90	$103,500

Step 2. Cost of goods sold

Cost of goods available for sale    $409,750

Less: Ending inventory                   - $103,500

Cost of goods sold                           $306,250

LIFO Method

Step 1. Ending inventory

Date	Units	Unit cost	Total cost
Aug. 1	10,500	$8.40	$88,200
Aug. 8	4,500	$7.40	$33,300
			$121,500

Step 2. Cost of goods sold

Cost of goods available for sale    $409,750

Less: Ending inventory                   - $121,500

Cost of goods sold                           $288,250

Average cost method

Step 1. Ending inventory

Weighted average unit cost = Cost of goods available for sale/Total units available for sale

= 409,750/55,000

= $7.45

Ending inventory = 15,000 x 7.45

            = $111,750

Step 2. Cost of goods sold

Cost of goods available for sale    $409,750

Less: Ending inventory                   - $111,750

Cost of goods sold                           $298,000

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