Question

Alitira Corporation provides the following information related to its merchandise inventory during the month of August 2021

Aug 1 Inventory on hand- 2,000 units cost $5.30 each

8 Purchased 8,000 units for $5.50 each

14 Sold 6,000 units for $12 each

    18 Purchased 6,000 units for $5.60

25 Sold 7,000 units for $11 each

28 Purchased 4,000 units for $5.80 each

31 Inventory on Hand - 7,000 units

Based on a perpetual Inventory system find the inventory balance Alitira would report on the balance sheet as well as the cost of goods sold it would report if it used the average cost method

Answer 1

Perpetual Inventory System Under Average Cost method Date Purchase Cost COGS Cost Quantity Cost Quantity Cost Quantity 2000 Ending Inventory Cost Cost $ 5.30 $ 10,600.00 01 - Aug 08-Aug 8000 $ 5.50 $ 44,000.00 2000 8000 10000 $ $ $ 5.30 5.50 5.46 $ 10,600.00 $ 44,000.00 $ 54,600.00 Avg Cost 14-Aug 6000 $ 5.46 $32,760.00 4000 $ 5.46 $ 21,840.00 18-Aug 6000 $ 5.60 $ 33,600.00 4000 6000 10000 $ $ $ 5.46 5.60 5.54 $ 21,840.00 $ 33,600.00 $ 55,440.00 Avg Cost 25-Aug 7000 $ 5.54 $38,808.00 3000 $ 5.54 $ 16,632.00 28-Aug 4000 $ 5.80 $ 23,200.00 3000 4000 $ $ 5.54 5.80 $ 16,632.00 $ 23,200.00 13000 $71,568.00 7000.00 $ 39,832.00 Ending Inventory Balance that should be reported on balance sheet Cost of goods sold $39,832.00 $71,568.00