Question

E 8-13 Inventory cost flow methods, periodic system @L08-1.@L08-4 Altira 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 cach. 8 Purchased 8,000 units for $5.50 each. 14 Sold 6,000 units for $12.00 cach, 18 Purchased 6,000 units for $5.60 cach. 25 Sold 7.000 units for $11.00 each. 28 Purchased 4.000 units for $5.80 cach. 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 statement 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

STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC FIFO METHOD
	RECIEPTS	COST OF GOODS SOLD	BALANCE
DATE	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $
Balance	2000	5.3	10600	2000	5.3	10600
Purchasse
Aug-08	8000	5.5	44000	8000	5.5	44000
18-Aug	6000	5.6	33600	3000	5.6	16800	3000	5.6	16800
28-Aug	4000	5.8	23200				4000	5.8	23200
TOTAL	20000		111400	13000		71400	7000		40000
STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC LIFO METHOD
	RECIEPTS	COST OF GOODS SOLD	BALANCE
DATE	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $
Balance	2000	5.3	10600				2000	5.3	10600
Purchasse
Aug-08	8000	5.5	44000	3000	5.5	16500	5000	5.5	27500
18-Aug	6000	5.6	33600	6000	5.6	33600
28-Aug	4000	5.8	23200	4000		23200
TOTAL	20000		111400	13000		73300	7000		38100
STATEMENT SHOWING INVENTORY RECORD UNDER PERIODIC WEIGHTED AVERAGE METHOD
	RECIEPTS	COST OF GOODS SOLD	BALANCE
DATE	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $	UNITS	RATE	AMOUNT $
Balance	2000	5.3	10600
Purchasse
Aug-08	8000	5.5	44000
18-Aug	6000	5.6	33600
28-Aug	4000	5.8	23200
TOTAL	20000	5.57	111400	13000	5.57	72410	7000	5.57	38990
Req a.
			FIFO	LIFO	Average
Ending inventory		40000	38100	38990
Req b.
			FIFO	LIFO	Average
Cost of goods sold		71400	73300	72410