Question

Orion Iron Corp. tracks the number of units purchased and sold throughout each year but applies...

 Orion Iron Corp. tracks the number of units purchased and sold throughout each year but applies its inventory costing method at the end of the year, as if it uses a periodic inventory system. Assume its accounting records provided the following information at the end of the annual accounting period, December 31.

 Transactions Units Unit Cost a. Inventory, Beginning 350 \$ 14 For the year: b. Purchase, April 11 950 12 c. Purchase, June 1 700 16 d. Sale, May 1 (sold for \$42 per unit) 350 e. Sale, July 3 (sold for \$42 per unit) 670 f. Operating expenses (excluding income tax expense), \$19,600
 . Compute the cost of ending inventory and cost of goods sold under (a) FIFO, (b) LIFO, and (c) weighted average cost. (Do not round intermediate calculations. Round your final answers to the nearest dollar amount.)

 . Prepare an Income Statement that shows the FIFO method, LIFO method and weighted average method.

Calculate cost of ending inventory and cost of goods sold :

 FIFO LIFO Weighted average Units of goods available for sale 2000 2000 2000 Cost of goods available for sale 27500 27500 27500 Ending inventory (700*16+280*12)=14560 (350*14+630*12) = 12460 (27500/2000*980) = 13475 Cost of goods sold (27500-14560) = 12940 (27500-12460) = 15040 (27500/2000*1020) = 14025

Prepare income statement :

 FIFO LIFO Weighted average Sales 1020*42 = 42840 42840 42840 Cost of goods sold -12940 -15040 -14025 Gross profit 29900 27800 28815 Operating expense -19600 -19600 -19600 Net operating income 10300 8200 9215

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