ACC305WEEK4ASSGN - 8-13 Inventory cost flow methods;...

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8-13 Inventory cost flow methods; periodic system 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. 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: First-in, first-out (FIFO) 1. First-in, first-out (FIFO) Beginning (2000 @$6.10) $12,200 Add: Purchases (16,000 @various prices) 85,000 COGS for sale (18,000) $97,200 Less: Ending Inventory (15,000) Cost of Goods Sold $82,200 2. Last-in, first-out (LIFO) Last-in, first-out (LIFO) Beginning (2000 @$6.10) $12,200 Add: Purchases (16,000 @various prices) 85,000 COGS for sale (18,000) $97,200 Less: Ending Inventory (17,700) Cost of Goods Sold $79,500 3. Average cost Average cost Beginning (2000 @$6.10) $12,200 Add: Purchases (16,000 @various prices) 85,000 COGS for sale (18,000) $97,200 Less: Ending Inventory (15,000) Cost of Goods Sold $82,200 Weighted average unit cost = $97,200/18,000 = $5.40 E 8-14 Inventory cost flow methods; perpetual system 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. 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) Purchase Beg. 2000 @6.10 = $12,200 Aug 8. 10,000 @5.50 = $55,000 Aug 14 Sold Balance 2,000 x 6.10 = $12,200 2,000 x 6.10 = $12,200 10,000 x 5.50 = $55,000 2,000 x 6.10 = $12,200 6,000 x 5.50 = $33,000 Aug 186,000 @5.00 = $30,000 Aug 25 4,000 x 5.50 = $22,000 4,000 x 5.50 = $22,000 6,000 x 5.00 = $30,000 4,000 x 5.50 = $22,000 3,000 x 5.00 = $15,000 3,000 x 5.00 = $15,000 $82,200 2. Last-in, first-out (LIFO)
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ACC305WEEK4ASSGN - 8-13 Inventory cost flow methods;...

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