Exercise 8-14 Inventory cost flow methods; perpetual system [LO8-1, 8-4] Altira

Question

Exercise 8-14 Inventory cost flow methods; perpetual system [LO8-1, 8-4]

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

Exercise 8-14 Part 3

3. 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 Average cost method.

Aug.1 Inventory on hand—2,700 units; cost $6.80 each. 8 Purchased 13,500 units for $6.20 each. 14 Sold 10,800 units for $12.70 each. 18 Purchased 8,100 units for $5.60 each. 25 Sold 9,800 units for $11.70 each. 31 Inventory on hand—3,700 units.

Explanation / Answer

  

Perpetual Average Purchase Cost of Goods Sold Inventory on hand # of units Cost per unit Inventory Value # of units sold Avg.Cost per unit Cost of Goods Sold # of units in ending inventory Cost per unit Ending inventory Beginning Inventory 2700 6.80 18360 Purchase - August 8 13,500 $6.20 83,700 16200 6.30 102060 Sale - August 14 10,800 $6.30 $68,040 5,400 $6.30 $34,020 Purchase - August 18 8,100 $5.60 45,360 13500 5.88 79380 Sale - August 25 9,800 5.88 57624 3,700 5.88 21756 Total 125664 21756

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