Question

AVERAGE COST METHOD

Altira Corporation provides the following information related to its merchandise inventory during the month of August 2021: Aug.1 Inventory on hand-3,200 units; cost $6.50 each. 8 Purchased 16,000 units for $6.70 each. 14 Sold 12,800 units for $13.20 each 18 Purchased 9,600 units for $6.80 each. 25 Sold 11,800 units for $12.20 each. 28 Purchased 5,200 units for $5.80 each. 31 Inventory on hand-9,400 units. 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 statement using each of the following cost flow methods. Complete this question by entering your answers in the tabs below. FIFO LIFO Average Cost 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 statement using the Average cost method. (Round "Average Cost per Unit" to 2 decimal places.) Average Cost Cost of Goods Available for Sale Unit it Cost of Goods # of units Cost Available for Sale Cost of Goods Sold - Average Cost # of units sold Average Cost Cost of Goods per Unit Sold Ending Inventory - Average Cost # of units in Average Ending ending Cost per Inventory inventory unit Beginning Inventory Purchases: August 8 August 18 August 28 Total 0

LIFO METHOD

Answer 1

In average cost method per unit purchase is derived by adding cost opening inventory and purchase made during the year and then dividing it by the adding the units of opeinng inventory and units purchased during the year Average Cost Cost Per Cost of Goods Available for Sale Cost of Goods No of Available for Unit Unit Sale 3200 $6.50 $20,800 Cost of Good Sold Periodic Average Ending inventory-Periodic Average Cost Per Cost of Good Cost Per Ending No of Unit No of Unit Unit Sold Unit inventory Beginning Purchases : Aug 8 Aug 18 Aug 28 16000 9600 5200 34000 $61,775 $161,665 $6.70 $6.80 $5.80 $6.57 $107,200 $65,280 $30,160 $223,440 Total 24600 $6.57 $161,665 9 400 $6.57 $61,775 Ending Inventory Cost of Good Sold

Last in, first out method (LIFO): In this method it is assumed that inventory which is purchased last will be sold first and the inventory will consist of old purchases. Periodic inventory System: In this system, the cost of sales and inventory are determined as the end of the accounting period. Cost of Goods Available for Sale Cost of Good Sold Periodic LIFO Ending inventory -Periodic LIFO LIFO Cost Per No of Unit Cost Per No of Unit Cost Per Unit $6.50 Cost of Good Sold No of Unit Cost of Goods Available for Sale $20,800 Unit Ending inventory 3200 $6.50 $0 3200 $6.50 $20,800 6200 $6.70 $41,540 $6.70 $6.80 Beginning Purchases: Aug 8 Aug 18 Aug 28 Total Ending Inventory Cost of Good Sold $6.70 $6.80 $5.80 $6.80 16000 9600 5200 34000 $107,200 $65,280 $30,160 $223,440 9800 9600 5200 24600 $5.80 $65,660 $65,280 $30,160 $161,100 $5.80 9400 $62,340 $161,100