Question

Exercise 8-13 (Static) Inventory cost flow methods; periodic system (LO8-1,8-4) 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) coat $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 $5.80 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 statement using each of the following cost flow methods.

Answer 1

FIFO METHDO
		COST OF GOODS AVAILABLE FOR SALE			COST OF GOODS SOLD			ENDING INVENTORY
Date	Particulars	No. of Units	Cost Per unit	Total	No. of Units	Cost Per unit	Cost of Goods Sold	No. of Units	Cost Per unit	Ending invetory
Aug, 01	Beginning inventory	2000	$                5.30	$10,600	2000	$           5.30	$10,600
Purchases:
Aug, 08	Purchases	8000	$                5.50	$44,000	8000	$           5.50	$44,000
Aug, 18	Purchases	6000	$                5.60	$33,600	3000	$           5.60	$16,800	3000	$           5.60	$16,800
Aug, 28	Purchases	4000	$                5.80	$23,200				4000	$           5.80	$23,200
	Total	20,000		$1,11,400	13,000		$71,400	7,000		$40,000
LIFO METHDO
		COST OF GOODS AVAILABLE FOR SALE			COST OF GOODS SOLD			ENDING INVENTORY
Date	Particulars	No. of Units	Cost Per unit	Total	No. of Units	Cost Per unit	Cost of Goods Sold	No. of Units	Cost Per unit	Ending invetory
Aug, 01	Beginning inventory	2000	$                5.30	$10,600				2000	$           5.30	$10,600
Purchases:
Aug, 08	Purchases	8000	$                5.50	$44,000	3000	$           5.50	$16,500	5000	$           5.50	$27,500
Aug, 18	Purchases	6000	$                5.60	$33,600	6000	$           5.60	$33,600
Aug, 28	Purchases	4000	$                5.80	$23,200	4000	$           5.80	$23,200
	Total	20,000		$1,11,400	13,000		$73,300	7,000		$38,100
Average Cost Method
		COST OF GOODS AVAILABLE FOR SALE			COST OF GOODS SOLD			ENDING INVENTORY
Date	Particulars	No. of Units	Cost Per unit	Total	No. of Units	Cost Per unit	Cost of Goods Sold	No. of Units	Cost Per unit	Ending invetory
Aug, 01	Beginning inventory	2000	$                5.30	$10,600
Purchases:
Aug, 08	Purchases	8000	$                5.50	$44,000
Aug, 18	Purchases	6000	$                5.60	$33,600
Aug, 28	Purchases	4000	$                5.80	$23,200
	Total	20,000	$5.57	$1,11,400	13,000	$5.57	$72,410	7,000	$5.57	$38,990