Orion Iron Corp. tracks the number of units purchased and sold throughout each y

Question

Orion Iron Corp. tracks the number of units purchased and sold throughout each year but applies ts Inventory costing method at the end of the yoar, as if t uses a periodic inventory syssem. Assume es accounting records provided the following information at the end Unit Units Cost 250 $10 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 unt t. Operating expenses (excluding income 600 400 250 350 13 tax expense) $16,100 Required: 1. Calculate the number and cos·ofgoods available for sale. mber of Goods Available for Sale Cost of Goods Available for Sale $12,500 2. Caloulate the number of units in ending inventory 650 units

Explanation / Answer

Quantity Amount per unit Costs Revenues Beginning inventory 250 $10.00 $2,500.00 Purchase, April 11 600 $8.00 $4,800.00 Purchase, June 1 400 $13.00 $5,200.00 Cost of goods available for sale 1250 $12,500.00 Sales (May 1) -250 $42.00 -$10,500.00 Sales (July 1) -350 $42.00 -$14,700.00 Ending Inventory 650 -$25,200.00 2) LIFO Quantity Amount per unit Cost of good sold Cost of Ending Inventory Sales May 1 250 $8.00 $2,000.00 Sales Jul 1 350 $13.00 $4,550.00 Beginning Inventory 250 $10.00 $2,500.00 Purchase, April 11 (600-450) 350 $8.00 $2,800.00 Purchase, June 1 (400-350) 50 $13.00 $650.00 $6,550.00 $5,950.00 check: $6550 + $5950 $12,500.00 FIFO Quantity Amount per unit Cost of good sold Cost of Ending Inventory May 1 250 $10.00 $2,500.00 July 1 350 $8.00 $2,800.00 Purchase, April 11 (600-350) 250 $8.00 $2,000.00 Purchase, June 1 400 $13.00 $5,200.00 $5,300.00 $7,200.00 Check: $5300 + $7200 $12,500.00 Average Average price per unit = $12500/1250 $10.00 Cost of Good Sold = $10 x 600 $6,000.00 Ending Inventory = 650 x $10 $6,500.00 Check : 6000 + 6500 $12,500.00 Cost of Ending Inventory Cost of GoodsSold FIFO $7,200.00 $5,300.00 LIFO $5,950.00 $6,550.00 Weighted Average Cost $6,500.00 $6,000.00 3) ORION IRON CORP Income Statement For the Year Ended December 31, FIFO LIFO Weighted Average Cost Sales $25,200.00 $25,200.00 $25,200.00 Less: COGS $5,300.00 $6,550.00 $6,000.00 Gross Profit $19,900.00 $18,650.00 $19,200.00 Less: Operating Expenses $16,100.00 $16,100.00 $16,100.00 Income from Operations $3,800.00 $2,550.00 $3,100.00

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