E7-8 (Algo) Analyzing and Interpreting the Financial Statement Effects of Periodic FIFO, LIFO, and Weighted Average Cost [LO 7-3]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. TransactionsUnitsUnit Costa. Inventory, Beginning400$ 15For the year: b. Purchase, April 1185013c. Purchase, June 175017d. Sale, May 1 (sold for $43 per unit)400 e. Sale, July 3 (sold for $43 per unit)510 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 1Required 2Required 3Required 4Required 6Compute the cost of ending inventory and cost of goods sold under (a) FIFO, (b) LIFO, and (c) weightedround intermediate calculations. Round your final answers to the nearest dollar amount.)Cost of EndingInventoryCost of GoodsSoldFIFOLIFOWeighted Average Cost Required 1Required 2Required 3Required 4Required 6Prepare an Income Statement that shows under the FIFO method, LIFO method and weighted average mORION IRON CORPORATIONIncome StatementFor the Year Ended December 31WeightedAverageFIFOLIFOIncome from operations

Name: E7-8 (Algo) Analyzing and Interpreting the Financial Statement Effects
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Description: E7-8 (Algo) Analyzing and Interpreting the Financial Statement Effects of Periodic FIFO, LIFO, and Weighted Average Cost [LO 7-3]Orion Iron Corporation tracks the number of units purchased and sold throughout each year but applies its inventory costi

The inventory can be valued using various methods as LIFO, FIFO and weighted average method. Under…

Answered: Orion Iron Corporation tracks the…

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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E7-8 (Algo) Analyzing and Interpreting the Financial Statement Effects of Periodic FIFO, LIFO, and Weighted Average Cost [LO 7-3]

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	Units	Unit Cost
a. Inventory, Beginning	400	$ 15
For the year:
b. Purchase, April 11	850	13
c. Purchase, June 1	750	17
d. Sale, May 1 (sold for $43 per unit)	400
e. Sale, July 3 (sold for $43 per unit)	510
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 1
Required 2
Required 3
Required 4
Required 6
Prepare an Income Statement that shows under the FIFO method, LIFO method and weighted average m
ORION IRON CORPORATION
Income Statement
For the Year Ended December 31
Weighted
Average
FIFO
LIFO
Income from operations

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