Orion Iron Corporation 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 a. Inventory, Beginning For the year: b. Purchase, April 11 c. Purchase, June 11 d. Sale, May 1 (sold for $43 per unit) e. Sale, July 3 (sold for $43 per unit) f. Operating expenses (excluding income tax expense), $18,900 Units 400 850 750 400 510 Unit Cost $ 15 13. 17 Required: 1. Calculate the number and cost of goods available for sale. 2. Calculate the number of units in ending inventory. 3. 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 under the FIFO method, LIFO method and weighted average method. 6. Which inventory costing method minimizes income taxes?
Orion Iron Corporation 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 a. Inventory, Beginning For the year: b. Purchase, April 11 c. Purchase, June 11 d. Sale, May 1 (sold for $43 per unit) e. Sale, July 3 (sold for $43 per unit) f. Operating expenses (excluding income tax expense), $18,900 Units 400 850 750 400 510 Unit Cost $ 15 13. 17 Required: 1. Calculate the number and cost of goods available for sale. 2. Calculate the number of units in ending inventory. 3. 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 under the FIFO method, LIFO method and weighted average method. 6. Which inventory costing method minimizes income taxes?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Orion Iron Corporation 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
a. Inventory, Beginning
For the year:
b. Purchase, April 11
c. Purchase, June 1
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Required 3 Required 4
Calculate the number and cost of goods available for sale.
Number of Goods Available for Sale
Cost of Goods Available for Sale
< Required 1
d. Sale, May 1 (sold for $43 per unit)
e. Sale, July 3 (sold for $43 per unit)
f. Operating expenses (excluding income tax expense), $18,900
Required:
1. Calculate the number and cost of goods available for sale.
2. Calculate the number of units in ending inventory.
3. 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 under the FIFO method. LIFO method and weighted average method.
6. Which inventory costing method minimizes income taxes?
Required 6
Units
400
units
850
750
400
510
Unit Cost
$ 15
Required 2 >
13
17
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VIEWStep 4: Computation of cost of goods sold & ending inventory using Periodic Weighted Average:
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