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 $ 14 a. Inventory, Beginning For the year: b. Purchase, April 11 c. Purchase, June 1 d. Sale, May 1 (sold for $42 per unit) e. Sale, July 3 (sold for $42 per unit) f. Operating expenses (excluding income tax expense), $19,600 350 950 12 700 16 350 670 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.
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 $ 14 a. Inventory, Beginning For the year: b. Purchase, April 11 c. Purchase, June 1 d. Sale, May 1 (sold for $42 per unit) e. Sale, July 3 (sold for $42 per unit) f. Operating expenses (excluding income tax expense), $19,600 350 950 12 700 16 350 670 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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
Transcribed Image Text:**Orion Iron Corporation Inventory Analysis**
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, assuming it uses a periodic inventory system. The information provided is as of the end of the annual accounting period, December 31.
**Transactions:**
- **Inventory, Beginning:**
- Units: 350
- Unit Cost: $14
- **For the Year:**
- **Purchase, April 11:**
- Units: 950
- Unit Cost: $12
- **Purchase, June 1:**
- Units: 700
- Unit Cost: $16
- **Sale, May 1 (sold for $42 per unit):**
- Units: 350
- **Sale, July 3 (sold for $42 per unit):**
- Units: 670
- **Operating Expenses** (excluding income tax expense): $19,600
**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
- (c) Weighted average cost
4. **Prepare an income statement that shows under the FIFO method, LIFO method, and weighted average method.**
6. **Determine which inventory costing method minimizes income taxes.**
**Instructions:**
- Complete each requirement by entering your answers in the provided tabs.
- For Requirement 1, calculate:
- **Number of Goods Available for Sale**
- **Cost of Goods Available for Sale**
Use the details and methods specified to analyze Orion Iron Corporation's inventory data effectively.
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