Altira Corporation uses a periodic inventory system. The following information r
ID: 2422394 • Letter: A
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 – 2,000 units, cost $6.10 each .
Aug. 8. Purchased 10,000 units for $5.50 each
Aug. 14. Sold 8,000 units for $12 each
Aug. 18. Purchased 6,000 units for $5 each
Aug. 25. Sold 7,000 units for $11 each
Aug. 31. Inventory on hand – 3,000 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.)
FIFO: 1. Cost of goods avaialbe for Sale (Begining and purchase #of unit, Cost per unit, Cost of Goods Avaiable for Sale)
2. Cost of Goods Sold-Periodic FIFO (#of units sod, cost per unit, Cost of Goods Sold with date)
3. Ending Iventory - Periodic FIFO (#of units in ending inventory, Cost per unit, Ending Inventory)
LIFO 1. Cost of goods avaialbe for Sale (Begining and purchase #of unit, Cost per unit, Cost of Goods Avaiable for Sale)
2. Cost of Goods Sold-Periodic LIFO (#of units sod, cost per unit, Cost of Goods Sold with date)
3. Ending Iventory - Periodic LIFO (#of units in ending inventory, Cost per unit, Ending Inventory)
Average Cost
1. Cost of goods avaialbe for Sale (Begining and purchase #of unit, Average Cost per unit, Cost of Goods Avaiable for Sale)
2. Cost of Goods Sold- (#of units sod, Average cost per unit, Cost of Goods Sold with date)
3. Ending Iventory (#of units in ending inventory, Average Cost per unit, Ending Inventory)
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 – 2,000 units, cost $6.10 each .
Aug. 8. Purchased 10,000 units for $5.50 each
Aug. 14. Sold 8,000 units for $12 each
Aug. 18. Purchased 6,000 units for $5 each
Aug. 25. Sold 7,000 units for $11 each
Aug. 31. Inventory on hand – 3,000 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.)
FIFO: 1. Cost of goods avaialbe for Sale (Begining and purchase #of unit, Cost per unit, Cost of Goods Avaiable for Sale)
2. Cost of Goods Sold-Periodic FIFO (#of units sod, cost per unit, Cost of Goods Sold with date)
3. Ending Iventory - Periodic FIFO (#of units in ending inventory, Cost per unit, Ending Inventory)
LIFO 1. Cost of goods avaialbe for Sale (Begining and purchase #of unit, Cost per unit, Cost of Goods Avaiable for Sale)
2. Cost of Goods Sold-Periodic LIFO (#of units sod, cost per unit, Cost of Goods Sold with date)
3. Ending Iventory - Periodic LIFO (#of units in ending inventory, Cost per unit, Ending Inventory)
Average Cost
1. Cost of goods avaialbe for Sale (Begining and purchase #of unit, Average Cost per unit, Cost of Goods Avaiable for Sale)
2. Cost of Goods Sold- (#of units sod, Average cost per unit, Cost of Goods Sold with date)
3. Ending Iventory (#of units in ending inventory, Average Cost per unit, Ending Inventory)
Explanation / Answer
As per FIFO:
Aug 14:
cost of goods avilable for sale=2,000*$6.1+10,000*$5.5=$67,200
cost of goods sold=2,000*$6.1+6,000*$5.5=$45,200
Aug 25
cost of goods avilable for sale=4,000*$5.5+6,000*$5=$52,000
cost of goods sold=4,000*$5.5+3,000*$5=$37,000
Value of inventory=3,000*$5=$15,000
As per Average cost method:
Aug 14:
cost of goods avilable for sale=2,000*$6.1+10,000*$5.5=$67,200
cost per unit avilable for sale=$67,200/12,000=$5.6
cost of goods sold=8,000*$5.6=$44,800
Aug 25
cost of goods avilable for sale=4,000*$5.6+6,000*$5=$52,400
cost good per unit avilable for sale=$52,400/10,000=$5.24
cost of goods sold=7,000*$5.24=$36,680
Value of inventory=3,000*$5.24=$15,720
As per LIFO:
Aug 14:
cost of goods avilable for sale=2,000*$6.1+10,000*$5.5=$67,200
cost of goods sold=8,000*$5.5=$44,000
Aug 25
cost of goods avilable for sale=2,000*$6.1+2,000*$5.5+6,000*$5=$53,200
cost of goods sold=6,000*$5+1,000*$5.5=$35,500
Value of inventory=1,000*$5.5+2,000*$6.1=$17,700
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