Orlon 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 perlodic Inventory system. Assume Its accounting records provided the following Information at the end of the annual accounting perlod, December 31. Transactions Units Unit Cost a. Inventory, Beginning For the year: b. Purchase, April 11 c. Purchase, June 1 d. Sale, May 1 (sold for $45 per unit) e. Sale, July 3 (sold for $45 per unit) f. Operating expenses (excluding incone tax expense), $18,800 250 $ 10 600 12 400 12 250 350 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) welghted average cost. 4. Prepare an Income statement that shows under the FIFO method, LIFO method and welghted average method. 6. Which inventory costing method minimizes income taxes?
Orlon 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 perlodic Inventory system. Assume Its accounting records provided the following Information at the end of the annual accounting perlod, December 31. Transactions Units Unit Cost a. Inventory, Beginning For the year: b. Purchase, April 11 c. Purchase, June 1 d. Sale, May 1 (sold for $45 per unit) e. Sale, July 3 (sold for $45 per unit) f. Operating expenses (excluding incone tax expense), $18,800 250 $ 10 600 12 400 12 250 350 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) welghted average cost. 4. Prepare an Income statement that shows under the FIFO method, LIFO method and welghted 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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Question
![**Orlon Iron Corporation Inventory and Costing Analysis**
Orlon 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 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:**
| Transactions | Units | Unit Cost |
|--------------------------|-------|-----------|
| a. Inventory, Beginning | 250 | $10 |
| **For the year:** | | |
| b. Purchase, April 11 | 600 | $12 |
| c. Purchase, June 1 | 480 | $12 |
| d. Sale, May 1 (sold for $45 per unit) | 250 | |
| e. Sale, July 3 (sold for $45 per unit)| 350 | |
| f. Operating expenses (excluding income tax expense) | | $18,000 |
**Tasks:**
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.
5. Which inventory costing method minimizes income taxes?
**Instructions:**
- Complete this question by entering your answers in the tabs below.
- **Required 1:**
- Calculate the number and cost of goods available for sale.
- **Inputs:**
- Number of Goods Available for Sale: ______ units
- Cost of Goods Available for Sale: ______
- **Required 2:**
- Proceed to next calculation step.
(Note: Ensure to plug in the numbers in the blanks provided as per the calculation steps in your coursework or study module guidelines.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4959d4f7-c515-4b84-8a14-00389cef5562%2Fc7dd9f12-cb85-40a6-9d0e-ccbb69193900%2Fl6mg6tl_processed.png&w=3840&q=75)
Transcribed Image Text:**Orlon Iron Corporation Inventory and Costing Analysis**
Orlon 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 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:**
| Transactions | Units | Unit Cost |
|--------------------------|-------|-----------|
| a. Inventory, Beginning | 250 | $10 |
| **For the year:** | | |
| b. Purchase, April 11 | 600 | $12 |
| c. Purchase, June 1 | 480 | $12 |
| d. Sale, May 1 (sold for $45 per unit) | 250 | |
| e. Sale, July 3 (sold for $45 per unit)| 350 | |
| f. Operating expenses (excluding income tax expense) | | $18,000 |
**Tasks:**
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.
5. Which inventory costing method minimizes income taxes?
**Instructions:**
- Complete this question by entering your answers in the tabs below.
- **Required 1:**
- Calculate the number and cost of goods available for sale.
- **Inputs:**
- Number of Goods Available for Sale: ______ units
- Cost of Goods Available for Sale: ______
- **Required 2:**
- Proceed to next calculation step.
(Note: Ensure to plug in the numbers in the blanks provided as per the calculation steps in your coursework or study module guidelines.)
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