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?

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter7: Inventories

Section: Chapter Questions

Problem 4PB: The beginning inventory for Dunne Co. and data on purchases and sales for a three-month period are...

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Reid Company uses the periodic inventory system. On January 1, it had an inventory balance of 250,000. During the year, it made 613,000 of net purchases. At the end of the year, a physical inventory showed it had ending inventory of 140,000. Calculate Reid Companys cost of goods sold for the year.
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