Altira Corporation uses a perpetual inventory system. The following transactions affected its merchandise inventory during the month of August 2016

Question

1.53K viewsDecember 20, 2016

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Darshita 6.14K December 20, 2016 0 Comments

Altira Corporation uses a perpetual inventory system. The following transactions affected its merchandise inventory during the month of August 2016:


Aug.1	Inventory on hand—2,000 units; cost $6.10 each.
8	Purchased 10,000 units for $5.50 each.
14	Sold 8,000 units for $12.00 each.
18	Purchased 6,000 units for $5.00 each.
25	Sold 7,000 units for $11.00 each.
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,LIFO and AVG Cost

1 Answer

score 0 · Answer 1 · 2016-12-20T04:23:38+00:00

	FIFO	LIFO	AVERAGE COST
Sales Units	15000	15000	15000
Cost OF Goods Sold	82200	79500	81690
Clposing Units	3000	3000	3000
Closing Value	17700	17700	15720

Working notes for the above answer is as under

FIFO
	Opeaning and Purchase			Sale			Total
Date	Unit	Cost	Total	Unit	Cost	Total	Unit	Cost	Total
1-Aug	2000	6.1	12200				2000	6.1	12200
8-Aug	10,000	5.5	55000				2000	6.1	12200
							10,000	5.5	55000

14-Aug				2000	6.1	12200
				6,000	5.5	33000	4,000	5.5	22000
18-Aug	6000	5	30000				4,000	5.5	22000
							6,000	5	30000

15-Aug				4,000	5.5	22000
				3,000	5	15000	3,000	5	15000
	18000		97200	15000		82200	3,000		15000

LIFO
	Opeaning and Purchase			Sale			Total
Date	Unit	Cost	Total	Unit	Cost	Total	Unit	Cost	Total
1-Aug	2000	6.1	12200				2000	6.1	12200
8-Aug	10,000	5.5	55000				2000	6.1	12200
							10,000	5.5	55000

14-Aug				8,000	5.5	44000	2000	6.1	12200
							2,000	5.5	11000
18-Aug	6000	5	30000				2000	6.1	12200
							2,000	5.5	11000
							6,000	5	30000

15-Aug				1,000	5.5	5500	2000	6.1	12200
				6,000	5	30000	1,000	5.5	5500
	18000		97200	15000		79500	3,000		17700

Average Cost
	Opeaning and Purchase			Sale			Total
Date	Unit	Cost	Total	Unit	Cost	Total	Unit	Cost	Total
1-Aug	2000	6.1	12200				2000	6.1	12200
8-Aug	10,000	5.5	55000				2000	6.1	12200
							10,000	5.5	55000
							12,000	5.6	67,200

14-Aug				8,000	5.6	44800	4000	5.6	22400

18-Aug	6000	5	30000				4000	5.6	22400
							6,000	5	30000
							10,000	5.24	52,400

15-Aug				7,000	5.27	36890	3000	5.24	15720
	18000		97200	15000		81690	3,000		15720

1 Answer

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