Question

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—3,900 units; cost $8.00 each.
8	Purchased 19,500 units for $7.40 each.
14	Sold 15,600 units for $13.90 each.
18	Purchased 11,700 units for $6.60 each.
25	Sold 14,600 units for $12.90 each.
31	Inventory on hand—4,900 units.

3. Determine the inventory balance Altira would report in its August 31, 2018, balance sheet and the cost of goods sold it would report in its August 2018 income statement using the Average cost method

Answer 1

Inventory Balance @ August 31, 2018 = 4,900 x 6.96 = $34,104

Cost of goods sold = $218,616

Perpetual Average	Inventory on Hand			Cost of Goods Sold			Inventory Balance
	# of units	Cost per unit	Inventory Value	# of units sold	Avg. cost per unit	Cost of Goods sold	# of units in ending inventory	Cost per unit	Ending inventory
Beginning inventory	3,900	8	31,200				3,900	8	31,200
Purchase - August 8	19,500	7.40	144,300				19,500	7.40	144,300
Subtotal average cost							23,400	7.50	175,500
Sale - August 14				15,600	7.50	117,000
Subtotal average cost							7,800	7.50	58,500
Purchase - August 18	11,700	6.60	77,220				11,700	6.60	77,220
Subtotal average cost							19,500	6.96	135,720
Sale - August 25				14,600	6.96	101,616
Total	35,100		252,720	30,200		218,616	4,900	6.96	34,104