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—6,500 units; cost $7.90 each. 8 Purchased 24,000 units for $6.90 each. 14 Sold 18,000 units for $13.40 each. 18 Purchased 13,000 units for $6.40 each. 25 Sold 17,000 units for $12.40 each. 31 Inventory on hand—8,500 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,LIFO, Average cost

Answer 1

Answer:-

Particulars	FIFO	LIFO	Average cost
	$	$	$
Ending inventory	54400	65150	57375
Cost of goods sold	245750	235000	242730

Expanation:-1)-

FIFO Method
Goods purchased			Cost of goods sold			Inventory balance
Date	# of units	Cost per unit	# of units sold	Cost per unit	Cost of goods sold	# of units	Cost per unit	Inventory balance
Aug-01						6500	7.9	51350
Aug-08	24000	6.9				6500	7.9	51350
						24000	6.9	165600
Aug-14			6500	7.9	51350	12500	6.9	86250
			11500	6.9	79350
Aug-18	13000	6.4				12500	6.9	86250
						13000	6.4	83200
Aug-25			12500	6.9	86250	8500	6.4	54400
			4500	6.4	28800
Totals			35000		245750

2)-

LIFO Method
Goods purchased			Cost of goods sold			Inventory balance
Date	# of units	Cost per unit	# of units sold	Cost per unit	Cost of goods sold	# of units	Cost per unit	Inventory balance
Aug-01						6500	7.9	51350
Aug-08	24000	6.9				6500	7.9	51350
						24000	6.9	165600
Aug-14			18000	6.9	124200	6500	7.9	51350
						6000	6.9	41400
Aug-18	13000	6.4				6500	7.9	51350
						6000	6.9	41400
						13000	6.4	83200
Aug-25			13000	6.4	83200	6500	7.9	51350
			4000	6.9	27600	2000	6.9	13800
Totals			35000		235000

3)-

Average Cost Method
Goods purchased			Cost of goods sold			Inventory balance
Date	# of units	Cost per unit	# of units sold	Cost per unit	Cost of goods sold	# of units	Cost per unit	Inventory balance
Aug-01						6500	7.9	51350
Aug-08	24000	6.9				6500	7.9	51350
						24000	6.9	165600
Average cost						30500	7.11	216950
Aug-14			18000	7.11	127980	12500	7.11	88875
Aug-18	13000	6.4				12500	7.11	88875
						13000	6.40	83200
Average cost						25500	6.75	172075
Aug-25			17000	6.75	114750	8500	6.75	57375
Totals			35000		242730