Question

Altira Corporation provides the following information related to its merchandise inventory during the month of August 2021: Aug. 1 14 18 Inventory on hand-2,000 units; cost $5.30 each. Purchased 8,000 units for $5.50 each. Sold 6,000 units for $12.00 each. Purchased 6,000 units for $5.60 each. Sold 7,000 units for $11.00 each. Purchased 4,000 units for $5.80 each. Inventory on hand-7,000 units. 31 Required: Using calculations based on a periodic inventory system, determine the inventory balance Altira would report in its August 31, 2021, balance sheet and the cost of goods sold it would report in its August 2021 income state- ment using each of the following cost flow methods: 1. First-in, first-out (FIFO) 2. Last-in, first-out (LIFO) 3. Average cost

Answer 1

Answer

• Units in
  >Beginning inventory = 2000
  >Purchased = 8000 + 6000 + 4000 = 18000
  >Sold = 6000 + 7000 = 13000
  >Ending invemtory 2000 + 18000 – 13000 = 7000
• Requirement 1, 2 and 3

	FIFO	LIFO	Average Cost
Ending Inventory	$    40,000.00	$            38,100.00	$               38,990.00
Cost of Goods Sold	$    71,400.00	$            73,300.00	$               72,410.00

• Workings

FIFO	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Beginning Inventory	2000	$                   5.30	$                      10,600.00	2000	$                 5.30	$               10,600.00	0	$                   5.30	$                         -
Purchases:
08-Aug	8000	$                   5.50	$                      44,000.00	8000	$                 5.50	$               44,000.00	0	$                   5.50	$                         -
18-Aug	6000	$                   5.60	$                      33,600.00	3000	$                 5.60	$               16,800.00	3000	$                   5.60	$          16,800.00
28-Aug	4000	$                   5.80	$                      23,200.00	0	$                 5.80	$                              -	4000	$                   5.80	$          23,200.00
TOTAL	20000		$                    111,400.00	13000		$               71,400.00	7000		$          40,000.00
LIFO	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Beginning Inventory	2000	$                   5.30	$                      10,600.00	0	$                 5.30	$                              -	2000	$                   5.30	$          10,600.00
Purchases:
08-Aug	8000	$                   5.50	$                      44,000.00	3000	$                 5.50	$               16,500.00	5000	$                   5.50	$          27,500.00
18-Aug	6000	$                   5.60	$                      33,600.00	6000	$                 5.60	$               33,600.00	0	$                   5.60	$                         -
28-Aug	4000	$                   5.80	$                      23,200.00	4000	$                 5.80	$               23,200.00	0	$                   5.80	$                         -
TOTAL	20000		$                    111,400.00	13000		$               73,300.00	7000		$          38,100.00
Average Method	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Beginning Inventory	2000	$                   5.30	$                      10,600.00
Purchases:
08-Aug	8000	$                   5.50	$                      44,000.00
18-Aug	6000	$                   5.60	$                      33,600.00
28-Aug	4000	$                   5.80	$                      23,200.00
TOTAL	20000	$                5.570	$                    111,400.00	13000	$             5.5700	$               72,410.00	7000	$              5.5700	$          38,990.00

Answer 2

correct answer