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 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.

Compute the cost of ending inventory and cost of goods sold under (a) FIFO, (b) LIFO, and (c) weighted average cost. (Do not round intermediate calculations. Round your final answers to the nearest dollar amount.)

       

Prepare an Income Statement that shows the FIFO method, LIFO method and weighted average method.

       

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.

Explanation / Answer

Calculate cost of ending inventory and cost of goods sold :

Prepare income statement :

FIFO LIFO Weighted average Units of goods available for sale 2000 2000 2000 Cost of goods available for sale 27500 27500 27500 Ending inventory (700*16+280*12)=14560 (350*14+630*12) = 12460 (27500/2000*980) = 13475 Cost of goods sold (27500-14560) = 12940 (27500-12460) = 15040 (27500/2000*1020) = 14025

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