CHAPTER 7 E7-8 Analyzing and Interpreting the Financial Statement Effects of Periodic FIFO, LIFO, and woll Weighted Average Costila mu bortom 1. 2. 3. 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 banoqon period, December 31. onolib borom goi b. Purchase, April 11 c. Purchase, June 1 Transactions (pibal Units moon! Jest Unit Cost Yagmo $12 a. Inventory, Beginning steb guwollal sT mstaca convm oibohsq 300 For the year: nsoxo 822 is einu 000, 2000 202 sa alinu 000.1 omsvit gui Esses and to loovai gaib 900 02,192x1000 POE la 1 amooni 800 vs basere 13 19 300 600 950 Required: d. Sale, May 1 (sold for $40 per unit) e. Sale, July 3 (sold for $40 per unit) f. Operating expenses (excluding income tax expense), $19,500 Inventory and Cost of Goods Sold LO 7-3 zborliom gruise00 beniupe gisw ban OLI 05 190u Calculate the number and cost of goods available for sale. Calculate the number of units in ending inventory. Compute the cost of ending inventory and cost of goods sold under (a) FIFO, (b) LIFO, and (c) weighted average cost. 4. Prepare an income statement that shows the FIFO method in one column, the LIFO method in another column, and the weighted average method in a final column. Include the follow- ing line items in the income statement: Sales, Cost of Goods Sold, Gross Profit, Operating Expenses, and Income from Operations. 5. Compare the Income from Operations and the ending inventory amounts that would be reported under the three methods. Explain the similarities and differences. 6. Which inventory costing method minimizes income taxes? sch S-TOJ
CHAPTER 7 E7-8 Analyzing and Interpreting the Financial Statement Effects of Periodic FIFO, LIFO, and woll Weighted Average Costila mu bortom 1. 2. 3. 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 banoqon period, December 31. onolib borom goi b. Purchase, April 11 c. Purchase, June 1 Transactions (pibal Units moon! Jest Unit Cost Yagmo $12 a. Inventory, Beginning steb guwollal sT mstaca convm oibohsq 300 For the year: nsoxo 822 is einu 000, 2000 202 sa alinu 000.1 omsvit gui Esses and to loovai gaib 900 02,192x1000 POE la 1 amooni 800 vs basere 13 19 300 600 950 Required: d. Sale, May 1 (sold for $40 per unit) e. Sale, July 3 (sold for $40 per unit) f. Operating expenses (excluding income tax expense), $19,500 Inventory and Cost of Goods Sold LO 7-3 zborliom gruise00 beniupe gisw ban OLI 05 190u Calculate the number and cost of goods available for sale. Calculate the number of units in ending inventory. Compute the cost of ending inventory and cost of goods sold under (a) FIFO, (b) LIFO, and (c) weighted average cost. 4. Prepare an income statement that shows the FIFO method in one column, the LIFO method in another column, and the weighted average method in a final column. Include the follow- ing line items in the income statement: Sales, Cost of Goods Sold, Gross Profit, Operating Expenses, and Income from Operations. 5. Compare the Income from Operations and the ending inventory amounts that would be reported under the three methods. Explain the similarities and differences. 6. Which inventory costing method minimizes income taxes? sch S-TOJ
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:1.
2.
3.
E7-8 Analyzing and Interpreting the Financial Statement Effects of Periodic FIFO, LIFO, and
Weighted Average Cost
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
di abru banon
period, December 31. motor
borliom goitebo voloval doidW
CHAPTER 7 Inventory and Cost of Goods Sold
LO 7-3
Transactions
a. Inventory, Beginning Bib qulwollel silT mstave osm sibonaq 300
For the year:ensaxe
b. Purchase, April 11
c. Purchase, June 1
(bibal Units moon! Jest Unit Cost
$12
sqo :862 18 21iau 000,00 (2E2 sa alinu 0001 nomovar gai
Edmosse uus lasieyda rag-tolovni gnib 900 02,102 x 100
POE in amoani 800 vs bnser2 13 15
300
600
d. Sale, May 1 (sold for $40 per unit)
e. Sale, July 3 (sold for $40 per unit)
f. Operating expenses (excluding income tax expense), $19,500
diam grised
beriupe
botrigiow bna Ou
Required:
Calculate the number and cost of goods available for sale.
Calculate the number of units in ending inventory.
Compute the cost of ending inventory and cost of goods sold under (a) FIFO, (b) LIFO, and
(c) weighted average cost.
amer
4.
Prepare an income statement that shows the FIFO method in one column, the LIFO method
in another column, and the weighted average method in a final column. Include the follow-
ing line items in the income statement: Sales, Cost of Goods Sold, Gross Profit, Operating
Expenses, and Income from Operations.
5. Compare the Income from Operations and the ending inventory amounts that would be
reported under the three methods. Explain the similarities and differences.
6. Which inventory costing method minimizes income taxes?
2.500
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