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—3,000 units; cost $7.50 each.
8	Purchased 19,000 units for $6.40 each.
14	Sold 12,500 units for $12.90 each.
18	Purchased 10,500 units for $5.90 each.
25	Sold 11,500 units for $11.90 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:

Answer 1

FIFO :
	Cost of goods available for sale			Cost of goods sold			Ending inventory
	# of units	Unit cost	Total cost	# of units sold	Unit cost	Cost of goods sold	# of units	unit cost	Ending inventory
Beginning inventory	3000	7.5	$22,500	3000	7.5	$22,500
Purchase
Aug-08	19000	6.4	$1,21,600	9500	6.4	$60,800
Aug-18	10500	5.9	$61,950	9500	6.4	$60,800
				2000	5.9	$11,800	8500	5.9	$50,150
Total	32500		$2,06,050	24000		$1,55,900	8500		$50,150

LIFO :
	Cost of goods available for sale			Cost of goods sold			Ending inventory
	# of units	Unit cost	Total cost	# of units sold	Unit cost	Cost of goods sold	# of units	unit cost	Ending inventory
Beginning inventory	3000	7.5	$22,500	0	0	$0	3000	7.5	$22,500
Purchase
Aug-08	19000	6.4	$1,21,600	12500	6.4	$80,000	6500	6.4	$41,600
Aug-18	10500	5.9	$61,950	10500	5.9	$61,950
				1000	6.4	$6,400	-1000	6.4	-$6,400
Total	32500		$2,06,050	24000		$1,48,350	8500		$57,700

Average cost
	Cost of goods available for sale			Cost of goods sold			Ending inventory
	# of units	Unit cost	Total cost	# of units sold	Average Unit cost	Cost of goods sold	# of units	Average unit cost	Ending inventory
Beginning inventory	3000	7.5	$22,500
Purchase
Aug-08	19000	6.4	$1,21,600
Aug-18	10500	5.9	$61,950
Total	32500		$2,06,050	33000	6.34	$2,09,220	8500	6.34	$53,890