Altira Corporation uses a periodic inventory system. The following information r

Question

Altira Corporation uses a periodic inventory system. The following information related to its merchandise inventory during the month of August 2016 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, 2016, balance sheet and the cost of goods sold it would report in its August 2016 income statement using each of the following cost flow methods: (Round "Average Cost per Unit" to 2 decimal places.)

Explanation / Answer

Cost of goods Sold:

Beginning inventory (3,500 x $6.70) = $23,450
Purchases (17,000 units x $6.20) = $105,400
Purchases (9500 units x $5.70) = $54,150 $159,550
Cost of goods available (30,000 units) $183,000
Less: Ending Inventory = ($183,000/30,000)x8000units -$48,800
Cost of Good Sold $134,200

Average Cost per unit = $183,000/30000 = $6.10
Ending Inventory = 8000 x $6.10 = $48,800

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