Question

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

Aug.1	Inventory on hand—3,300 units; cost $7.40 each.
8	Purchased 16,500 units for $6.80 each.
14	Sold 13,200 units for $13.30 each.
18	Purchased 9,900 units for $6.20 each.
25	Sold 12,200 units for $12.30 each.
28	Purchased 5,300 units for $5.80 each.
31	Inventory on hand—9,600 units.

Required:
1. Using calculations based on a perpetual 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 the FIFO method.
 

2. Using calculations based on a perpetual 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 the Average cost method. (Round "Average Cost per Unit" to 2 decimal places.)

Answer 1

Solution:

Computation of ending inventory COGS under Weighted Average Cost - Altira Corporation
Date	Beginning Inventory	Purchase	Cost of Goods Sold	Ending Inventory
Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
1-Aug	3300	$7.40	$24,420	0	$0.00	$0	0	$0.00	$0	3300	$7.40	$24,420
8-Aug	3300	$7.40	$24,420	16500	$6.80	$112,200	0	$0.00	$0	19800	$6.90	$136,620
14-Aug	19800	$6.90	$136,620	0	$0.00	$0	13200	$6.90	$91,080	6600	$6.90	$45,540
18-Aug	6600	$6.90	$45,540	9900	$6.20	$61,380	0	$0.00	$0	16500	$6.48	$106,920
25-Aug	16500	$6.48	$106,920	0	$0.00	$0	12200	$6.48	$79,056	4300	$6.48	$27,864
28-Aug	4300	$6.48	$27,864	5300	$5.80	$30,740	0	$0.00	$0	9600	$6.10	$58,604
Total							25400		$170,136	9600		$58,604

Average cost per unit under cost of goods sold = $170,136 / 25400 = $6.70 per unit