Required information Altira Corporation uses a perpetual inventory system. The f

Question

Required information

Altira Corporation uses a perpetual inventory system. The following transactions affected its merchandise inventory during the month of August 2018:

Required:
1. 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 the FIFO method. (Round "Cost per Unit" to 2 decimal places.)

Aug.1 Inventory on hand—3,900 units; cost $8.00 each. 8 Purchased 19,500 units for $7.40 each. 14 Sold 15,600 units for $13.90 each. 18 Purchased 11,700 units for $6.60 each. 25 Sold 14,600 units for $12.90 each. 31 Inventory on hand—4,900 units.

Explanation / Answer

Inventory balance = $32340

Cost of goods sold = $220380

Explanation;

Date

Details

Per unit cost

Total cost

Aug. 1

Inventory on hand—3,900 units

$8

$31200

Aug. 8

Purchased 19,500 units

$7.40

$144300

Aug. 14

Sold 15,600 units (Cost of goods sold for these units are as follow;)

3900 units @$8

$8

$31200

11700 units @$7.40

$7.40

$86580

Balance (19500 – 11700) = 7800 units @$7.40

$7.40

$57720

Aug. 18

Purchased 11,700 units

$6.60

$77220

Aug. 25

Sold 14,600 units (Cost of goods sold for these units are as follow;)

7800 units @ $7.40

$7.40

$57720

6800 units @ $6.60

$6.60

$44880

Balance (11700 – 6800) = 4900 units @$6.60

$6.60

$32340

Aug. 31

Ending inventory (4900 units * $6.60)

$6.60

$32340

Cost of goods sold ($31200 + $86580 + 57720 + $44880)

$220380

Date

Details

Per unit cost

Total cost

Aug. 1

Inventory on hand—3,900 units

$8

$31200

Aug. 8

Purchased 19,500 units

$7.40

$144300

Aug. 14

Sold 15,600 units (Cost of goods sold for these units are as follow;)

3900 units @$8

$8

$31200

11700 units @$7.40

$7.40

$86580

Balance (19500 – 11700) = 7800 units @$7.40

$7.40

$57720

Aug. 18

Purchased 11,700 units

$6.60

$77220

Aug. 25

Sold 14,600 units (Cost of goods sold for these units are as follow;)

7800 units @ $7.40

$7.40

$57720

6800 units @ $6.60

$6.60

$44880

Balance (11700 – 6800) = 4900 units @$6.60

$6.60

$32340

Aug. 31

Ending inventory (4900 units * $6.60)

$6.60

$32340

Cost of goods sold ($31200 + $86580 + 57720 + $44880)

$220380

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