Question

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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 period, December 31. Unit Units Cost 350 $12 Transactions a. Inventory, Beginning For the year: b. Purchase, April 11 c. Purchase, June 1 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), $18,300 800 850 350 640 Required: 1. Calculate the units available for sale and cost of goods available for sale. Units Available for Sale Cost of Goods Available for Sale 2,000 units $ 25,800 2. Calculate the number of units in ending inventory. Ending Inventory 1,010 units

Answer 1

Answer 1
	Units Available for Sale	2000	Units
	Cost of Goods Available for Sale	25800
Answer 2
	Ending Inventory	1010	Units
Answer 3		Cost of Ending Inventory	Cost of Goods sold
.	FIFO	$             15,200	$10,600
	LIFO	$             10,800	$15,000
	Weighted Average Cost	$             13,029	$      12,771
Answer 4	ORION IRON CORP.
	Income Statement
	For the Year Ended December 31
		FIFO	LIFO	Weighted Average
	Sales Revenue = 990*40	39600	39600	39600
	Cost of Goods sold	$10,600	$15,000	$    12,771
	Gross profit	$29,000	$24,600	$26,829
	Operating Expenses
		18300	18300	18300
	Income (loss) from operations	$10,700	$6,300	$8,529

Answer 5

LIFO

Detailed workings for above answers

FIFO
Ending Inventory Valuation
From	Units		Rate		Total
1-Jun	850	x	16	=	13600
11-Apr	160		10		1600
Total	1010				$ 15,200
Cost of Goods Sold
Date	Units In		Unit Cost		Total
Beginning Inventory	350	x	$12.00	=	$4,200
11-Apr	640	x	10	=	$6,400
	990				$10,600
LIFO
Ending Inventory Valuation
From	Units		Rate		Total
Beginning Inventory	350	x	12	=	4200
11-Apr	660		10		6600
Total	1010				$ 10,800
Cost of Goods Sold
Date	Units In		Unit Cost		Total
1-Jun	850	x	$16.00	=	$13,600
11-Apr	140	x	10	=	$1,400
	990				$15,000
Weighed Average method
Beginning Inventory	350	x	$12.00	=	$4,200
11-Apr	800	x	10	=	$8,000
1-Jun	850	x	16	=	$13,600
	2,000				$25,800
Ending Inventory Valuation
	AMOUNT		QUANTITY		RATE
Weighted Average	$ 25,800	/	2000	=	$ 12.900
	Units		Rate		Amount
Ending Inventory	1010	x	$    12.90	=	$ 13,029
	Units		Rate		Amount
Cost of Goods Sold	990	x	$    12.90	=	$ 12,771