Required information Exercise 8-14 Inventory cost flow methods; perpetual system

Question

Required information 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 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. 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 solo it would report in its August 2018 income statement using the Average cost method. (Round "Average Cost per Unit" to 2 decimal places.) #of Perpetual Average #of Avg.Cost Costof 1 units in units per Goods soldunit Cost #of er Inventory Ending units per unit Sold ending invento unit Inventory Beginning Invento Purchase - August 8 Sale - August 14 Purchase - August 18 Sale August 25 Total 5,400 3,700 0 0

Explanation / Answer

ANSWER = CALCUALTION OF COST OF GOODS SOLD AND INVENTORY VALYE BY USING WEIGHTED AVERAGE COST Purchases Cost of Goods Sold Inventory on hand No. of Units Cost Per Unit Inventory Value No. of Units Cost Per Unit Inventory Value Quantity Unit Cost Ending Inventory Beginning Inventory 2700 $6.80 $18,360 Purchase = Aug -08 13500 $6.20 $83,700 16200 $6.30 $1,02,060 Sale - Aug 14 10800 $6.30 $68,040 5400 $6.30 $34,020 Purcahse - Aug -18 8100 $5.60 $45,360 13500 $5.88 $79,380 Sale - Aug 25 9800 $5.88 $57,624 3700 $5.88 $21,756 TOTAL                  21,600 $1,29,060                     20,600 $1,25,664 3700 $5.88 $21,756 Answer = Inventory Balance = $21,756 COGS = $1,25,664

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