Question

E 8-13 Inventory cost flow methods: periodic system • LO8-1, LO8-4 Altira Corporation provides the following information related to its merchandise inventory during 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 $12.00 each. 18 Purchased 6,000 units for $5.60 each. 25 Sold 7.000 units for $11.00 each. 28 Purchased 4,000 units for $5.00 each 31 Inventory on hand-7,000 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 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

H I J C D E F G Requirement 1: Periodic -FIFO DATE Cost of goods available for sale Cost of Goods sold N w Closing inventory Units Rate Amount Units Rate Amount Units Rate Ending inventory 2000 5.3 10600 2000 5.3 10600 Beginning Inventory Purchase 8-Aug 8000 5.5 44000 2000 8000 4000 5.3 5.5 5.5 10600 44000 22000 14-Augl 5.3 2000 4000 10600 22000 5.5 18-Aug 6000 5. 6 33600 5.5 4000 6000 3000 5.6 22000 33600 16800 25-Aug 5.6 4000 3000 5.5 5.6 220001 16800 28-Aug 4000 5.80 23200 3000 4000 7,000 5.6 5.8. 16800 23200 40000 TOTALS 20,000 111,400 13,000 71,400

A B C D E F G H I J K Requirement 2: Periodic LIFO DATE Cost of goods available for sale Cost of Goods sold Closing inventory Units Inits Rate Amount Units Rate Amount Units Rate Ending inventory 2000 5.3 10600 2000 5.3 10600 Beginning Inventory Purchase 8-Aug 8000 5.5 44000 5.3 5.5 5.3 5.5 10600 44000 10600 11000 2000 8000 20001 2000 14-Aug 6000 5.5 33000 18-Aug 6000 56 33600 2000 2000 6000 2000 5.3 5.5 5.6 5.3 5.5 10600 11000 33600 10600 5500 25-Aug 6000 1000 56 5.5 33600 5500 1000 28-Aug 4000 5.8 23200 2000 1000 40001 7,000 5.3 10600 5.5 5500 5.8. 23200 39,300 TOTALS 20,000 111,400 13,000 72,100

A B C D E F G H I J K Requirement 3: Weighted Average-F DATE Cost of goods available for sale Cost of Goods sold Closing inventory Units Rate Amount Units Rate Amount Units Rate Ending inventory 2000 5.31 10600 Beginning Inventory Purchase 8-Aug 18-Aug 28-Aug TOTALS 5.5 8000 6000 4000 20,000 5.6 5.81 44000 33600 232001 111,400 13000 5.57 72,410 7000 5.57 38,990 Average Cost per unit = Total cost of goods available/ total units = (111,400/20,000) = $5.57 per unit

Working :

А н Requirement 1: DATE D Periodic -FIFO Cost of goods available for sale Cost of Goods sold Closing inventory Units Rate Amount Units Rate Amount Units Rate Ending inventory 2000 5.3 =+C5*D5 2000 5.3 =+15*J5 Beginning Inventory Purchase 44051 8000 5.5 =+D7*C7 2000 8000 =8000-4000 5.3 5.5 5.5 =+17*J7 =+J8*18 =+J9*19 44057 2000 4000 =+F9*G9 =+F10*G10 5.5 44061 6000 5.6 =+D11*C11 =8000-4000 6000 =6000-3000 5.5 5.6 5.6 =+J11*111 =+J12*112 =+J13*113 44068 5.5 =8000-4000 3000 =+G13*F13 =+F14*G14 44071 4000 5.8 =+C15*D15 5.6 =6000-3000 4000 =+|15+116 5.8 =+J15*115 =+116*J16 =+K15+K16 TOTALS =+SUM(C5:C15) =+SUM(E5:E15) =+SUM(F5:F15) =+SUM(H5:H15) 18

C D F G H I J B Requirement 2: E Periodic LIFO DATE Cost of goods available for sale Cost of Goods sold Closing inventory Units Rate Amount Units Rate Amount Units Rate Ending inventory 2000 5.3 –+C24*D24 2000 5.3 =+124*J24 Beginning Inventory Purchase 44051 8000 5.5 =+D26*C26 5.3 5.5 2000 8000 2000 =8000-6000 =+26*J26 =+J27*127 =+128*J28 =+J29*129 44057 6000 =+F28*G28 5.3 5.5 44061 6000 5.6 =+D31*C31 2000 5.3 5.5 5.6 =8000-6000 16000 2000 1000 =+131*J31 =+J32*132 =+J33*133 =+134* J34 =+J35*135 44068 16000 1000 =+G34*F34 =+F35*G35 5.3 5.5 44071 4000 .8 =+C37*D37 2000 1000 4000 =+SUM(H24:H39) =+SUM(137:139) 5.3 5.5 5.8 =+137*J37 =+J38*138 =+139*J39 =+SUM(K37:K39) TOTALS =+SUM(C24:C39) =+SUM(E24:E39) =+SUM(F24:F39)

H Requirement 3: DATE Weighted Average-Periodic Cost of goods available for sale Cost of Goods sold Closing inventory Units Rate Amount Units Rate Amount Units Rate Ending inventory 2000 5.3 le+C46*D46 Beginning Inventory Purchase 44051 44061 44071 TOTALS 8000 6000 4000 =+SUM(C46:C50) 5.5 5.6 5.8 =+D48*C48 =+D49*C49 =+C50*D50 =+SUM(E46:E50) 13000 5.57 =+F51*G51 7000 5.57 =+151*J51