Question

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

300

$

12

  For the year:

  b. Purchase, April 11

900

10

  c. Purchase, June 1

800

13

  d. Sale, May 1 (sold for $40 per unit)

300

  e. Sale, July 3 (sold for $40 per unit)

600

  f. Operating expenses (excluding income tax expense), $19,500

1. Calculate the number and cost of goods available for sale.

Number of Goods Available for Sale. ? units

Cost of Goods Available for Sale. ?

2. Calculate the number of units in ending inventory.

Ending Inventory

units

3.

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.)

Cost of Ending Inventory. Cost of Goods Sold

FIFO ? ?

LIFO ? ?

Weighted Average Cost. ? ?

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

ORION IRON CORP.Income StatementFor the Year Ended December 31

FIFO

LIFO

Weighted Average

Income from operations

Answer 1

Transactions	Units	Unit Cost	Total cost
a. Inventory, Beginning	300	12	3600	$
For the year:
b. Purchase, April 11	900	10	9000
c. Purchase, June 1	800	13	10400
Total	2000		$23000
ans
Number of Goods Available for Sale.	2000
Cost of Goods Available for Sale.	23000
ans 2
ending Inventory (2000-300-600)	1100
Ans 3
	Costof Ending Inventory	cost of good sold
FIFO	13400	9600
	(800*13)+(300*10)	(300*12)+(600*10)
LIFO	11600	11400
	(300*12)+(800*10)	(100*10)+(800*13)
Weighte avg cost	12650	10350
(23000/2000)=11.5	(11.5*1100)	(11.5*900)
ans 4
	FIFO	LIFO	Weighted avg
Sales (300*40)+(600*40)	36000	36000	36000
Less: Cost of good sold	9600	11400	10350
Gross profit	26400	24600	25650
Operating expenses	19500	19500	19500
Income from operations	6900	5100	6150