Altira Corporation provides the following information related to its inventory during the month of August 2024:August 1 Inventory on hand3,500 units; cost $7.60 each.August 8Purchased 17,500 units for $7.00 each.August 14Sold 14,000 units for $13.50 each. August 18Purchased 10, 500 units for $6.80 each.August 25Sold 13,000 units for $12.50 each August 28Purchased 5, 500 units for $5.80 each.August 31 Inventory on hand 10,000 units. Using calculations based on a perpetual inventory system, determine the inventory balance Altira would report in its August 31, 2024, balance sheet and the cost of goods sold it would report in its August 2024 income statement using last-in, first-out (LIFO).

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Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.