Required informationSkip to question [The following information applies to the questions displayed below.] Altira Corporation provides the following information related to its merchandise inventory during the month of August 2021: Aug.1Inventory on hand—3,700 units; cost $7.80 each.8Purchased 18,500 units for $7.20 each.14Sold 14,800 units for $13.70 each.18Purchased 11,100 units for $6.40 each.25Sold 13,800 units for $12.70 each.28Purchased 5,700 units for $5.80 each.31Inventory on hand—10,400 units. Required:1. Using calculations based on a perpetual inventory system, determine the inventory balance Altira would report in its August 31, 2021, balance sheet and the cost of goods sold it would report in its August 2021 income statement using the FIFO method. ### Perpetual FIFO Inventory Table**Cost of Goods Available for Sale**| Date | # of units | Cost per unit | Cost of Goods Available for Sale ||---------------------|------------|---------------|---------------------------------|| Beg. Inventory | 3,700 | $7.80 | $28,860 || August 8 | 18,500 | $7.20 | $133,200 || August 18 | 11,100 | $6.40 | $71,040 || August 28 | 5,700 | $5.80 | $33,060 || **Total** | **39,000** | | **$266,160** |**Cost of Goods Sold - August 14**| Date | # of units sold | Cost per unit | Cost of Goods Sold ||-----------------|-----------------|---------------|--------------------|| August 14 | 3,700 | $7.80 | $28,860 |**Cost of Goods Sold - August 25**| Date | # of units sold | Cost per unit | Cost of Goods Sold ||-----------------|-----------------|---------------|--------------------|| August 25 | 7,400 | $7.20 | $53,280 |**Total Cost of Goods Sold**: $108,780**Inventory Balance**| Date | # of units in inventory | Cost per unit | Ending Inventory ||--------------------|-------------------------|---------------|------------------|| August 28 | | $5.80 | $0 |### ExplanationThe table uses the FIFO (First-In, First-Out) method to calculate inventory and cost of goods sold for a company named Altira. Under FIFO, the oldest inventory costs are used up first when calculating cost of goods sold.- **Beginning Inventory**: 3,700 units at $7.80 each.- **Purchases**: Inventory purchases are recorded on August 8, August 18, and August 28 with varying costs per unit.- **Cost of Goods Sold** is calculated by subtracting sold units from available stock using the oldest available inventory first.- **Ending Inventory** reflects the remaining units after sales, with the latest purchase cost recorded.Through this system, businesses manage their inventory and

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Description: Required informationSkip to question [The following information applies to the questions displayed below.] Altira Corporation provides the following information related to its merchandise inventory during the month of August 2021: Aug.1Inventory on h

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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[The following information applies to the questions displayed below.]

Altira Corporation provides the following information related to its merchandise inventory during the month of August 2021:


Aug.1	Inventory on hand—3,700 units; cost $7.80 each.
8	Purchased 18,500 units for $7.20 each.
14	Sold 14,800 units for $13.70 each.
18	Purchased 11,100 units for $6.40 each.
25	Sold 13,800 units for $12.70 each.
28	Purchased 5,700 units for $5.80 each.
31	Inventory on hand—10,400 units.

Required:
1. Using calculations based on a perpetual inventory system, determine the inventory balance Altira would report in its August 31, 2021, balance sheet and the cost of goods sold it would report in its August 2021 income statement using the FIFO method.

### Perpetual FIFO Inventory Table

**Cost of Goods Available for Sale**

| Date | # of units | Cost per unit | Cost of Goods Available for Sale |
|---------------------|------------|---------------|---------------------------------|
| Beg. Inventory | 3,700 | $7.80 | $28,860 |
| August 8 | 18,500 | $7.20 | $133,200 |
| August 18 | 11,100 | $6.40 | $71,040 |
| August 28 | 5,700 | $5.80 | $33,060 |
| **Total** | **39,000** | | **$266,160** |

**Cost of Goods Sold - August 14**

| Date | # of units sold | Cost per unit | Cost of Goods Sold |
|-----------------|-----------------|---------------|--------------------|
| August 14 | 3,700 | $7.80 | $28,860 |

**Cost of Goods Sold - August 25**

| Date | # of units sold | Cost per unit | Cost of Goods Sold |
|-----------------|-----------------|---------------|--------------------|
| August 25 | 7,400 | $7.20 | $53,280 |

**Total Cost of Goods Sold**: $108,780

**Inventory Balance**

| Date | # of units in inventory | Cost per unit | Ending Inventory |
|--------------------|-------------------------|---------------|------------------|
| August 28 | | $5.80 | $0 |

### Explanation

The table uses the FIFO (First-In, First-Out) method to calculate inventory and cost of goods sold for a company named Altira. Under FIFO, the oldest inventory costs are used up first when calculating cost of goods sold.

- **Beginning Inventory**: 3,700 units at $7.80 each.
- **Purchases**: Inventory purchases are recorded on August 8, August 18, and August 28 with varying costs per unit.
- **Cost of Goods Sold** is calculated by subtracting sold units from available stock using the oldest available inventory first.
- **Ending Inventory** reflects the remaining units after sales, with the latest purchase cost recorded.

Through this system, businesses manage their inventory and

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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