Altira Corporation uses a periodic inventory system. The following information r
ID: 2425942 • Letter: A
Question
Altira Corporation uses a periodic inventory system. The following information related to its merchandise inventory during the month of August 2013 is available:
Determine the inventory balance Altira would report in its August 31, 2013, balance sheet and the cost of goods sold it would report in its August 2013 income statement using each of the following cost flow methods: (Do not round intermediate calculations.)
Aug.1 Inventory on hand—6,000 units; cost $7.70 each. 8 Purchased 18,000 units for $6.3 each. 14 Sold 14,000 units for $12.8 each. 18 Purchased 10,000 units for $5.8 each. 25 Sold 13,000 units for $11.8 each. 31 Inventory on hand—7,000 units.Explanation / Answer
a) FIFO Method Aug.1 Beginning balance 6000 $ 7.70 $ 46,200 Aug.8 Purchase 18000 $ 6.30 $ 113,400 Aug. 25 Purchase 10000 $ 5.80 $ 58,000 Aug.31 Inventory available for sale $ 217,600 Less: Inventory on hand 7000 $ 5.80 $ 40,600 COGS $ 177,000 b) LIFO Method Beginning balance 6000 $ 7.70 $ 46,200 Purchase 18000 $ 6.30 $ 113,400 Purchase 10000 $ 5.80 $ 58,000 Inventory available for sale $ 217,600 Less: Inventory on hand 6000 $ 7.70 $ 46,200 1000 $ 6.30 $ 6,300 Total Inventory on hand $ 52,500 COGS $ 165,100 c) Beginning balance 6000 $ 7.70 $ 46,200 Purchase 18000 $ 6.30 $ 113,400 Purchase 10000 $ 5.80 $ 58,000 Inventory available for sale 34000 $ 217,600 Average price per unit $ 6.40 Less: Inventory on hand 7000 $ 6.40 $ 44,800 COGS $ 172,800
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