Question

Altira Corporation uses a periodic inventory system. The following information related to its merchandise inventory during the month of August 2018 is available:

Aug.1	Inventory on hand—3,500 units; cost $6.70 each.
8	Purchased 17,000 units for $6.20 each.
14	Sold 11,500 units for $12.70 each.
18	Purchased 9,500 units for $5.70 each.
25	Sold 10,500 units for $11.70 each.
31	Inventory on hand—8,000 units.

Required:
Determine the inventory balance Altira would report in its August 31, 2018, balance sheet and the cost of goods sold it would report in its August 2018 income statement using each of the following cost flow methods:

1. fifo

2. lifo

3. average cost

Answer 1

1-Aug	inventory on hand			3500	6.7	23450
8-Aug	purchased			17000	6.2	105400
18-Aug	purchased			9,500	5.7	54150
	total			30000		183000
	Sold			22000
1)	FIFO
	cost of goods sold
1-Aug	inventory on hand			3500	6.7	23450
8-Aug	purchased			17000	6.2	105400
18-Aug	purchased			1,500	5.7	8550
	total			22000		137400
	ending inventory 8000 *5.70=					45600
2)	LIFO
18-Aug	purchased			9,500	5.7	54150
8-Aug	purchased			12,500	6.2	77500
	total			22,000		131650
	ending inventory
1-Aug	inventory on hand			3500	6.7	23450
8-Aug	purchased			4,500	6.2	27900
	total					51350
3)	Average cost
	183000/30000
	6.1
	cost of goods sold   = 22000*6.10=					134200
	Ending iventory      =   8,000*6.10=					48800
	Answer-
				COGS	inventory
	FIFO			137400	45600
	LIFO			131,650	51350
	Average cost			134200	48800