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Inventory Balance of Altira Corp using FIFO, LIFO, Average Cost

Altira Corporation uses a periodic inventory system. The following information related to its merchandise inventory during the month of August 2011 is available:

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, 2011, balance sheet and the cost of goods sold it would report in its August 2011 income statement using each of the following cost flow methods:
1. First-in, first-out (FIFO)
2. Last-in, first-out (LIFO)
3. Average cost

[This is a variation of Exercise 8-13 modified to focus on the perpetual inventory system and alternative cost flow methods.]

Altira Corporation uses a perpetual inventory system. The following transactions affected its merchandise inventory during the month of August 2011:

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.

p. 431

Required:

Determine the inventory balance Altira would report in its August 31, 2011, balance sheet and the cost of goods sold it would report in its August 2011 income statement using each of the following cost flow methods:
1. First-in, first-out (FIFO)
2. Last-in, first-out (LIFO)
3. Average cost.

Solution Summary

The solution determines the inventory balance of Altira Corp. using FIFO, LIFO and average cost.

$2.19