Orion iron corp.tracks the number of units purchased and sold throughout each ye

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 Perpetual inventory system. Assume its accounting records provided the following information at the end of the annual accounting period, December 31,2014

1. The number of goods available for sale for the year 2014 is

2. the cost of goods available for sale for the year 2014 is

3. The number of units in Ending Inventory is

4. The cost of ending inventory under FIFO is

5. The cost of goods sold under FIFO is

6. The cost of ending inventory under Weighted Average costing method is (Round to the nearest dollar)

7. The cost of goods sold under Weighted Average costing method is (Round to the nearest dollar)

Transactions unit unitcost a.inventory,December31,2013 3,000 $12 For the year 2014 b.Purchase,April 11 9,000 10 c.Purchase,june 1 8,000 13 d.sale,May1(sold for $40 per unit) 3,000 e.sale,july3(sold for $40 per unit) 6,000 f.Operating expenes(excluding income tax expense),$195,000

Explanation / Answer

1. Number of Goods available for Sale for the year 2014 =

Opening Inventory =                                        3000 units

Purchase Apr 11=       9000 units

Purchases June 1= 8000 units

Total units available for Sales in 2014=             20000 units

2. Cost of Goods available for Sales 2014

                                                                     Units                         unit cost               Total Cost

Opening Inventory =                                        3000 units                    12                     36000 (12*3000)

Purchase Apr 11=       9000 units                    10                       90000 (10*9000)

Purchases June 1= 8000 units                    13                       104000 (13*8000)

Total cost of units available for Sales in 2014=                                               230000

3. Number of units in ending Inventory

Opening Inventory =                                          3000 units

Add: Purchase Apr 11=       9000 units

Add: Purchases June 1= 8000 units

Less:Sales May1                                                    3000 units

Less Sales July 3                                                   6000 units

Ending Inventory                                                    11000 units

4 & 5 Cost of ending Inventory and Cost of Goods sold under FIFO

i.e. As calculated in table, total cost of goods sold for 9000 unis will be $ 96000

Cost of Closing Inventory will be (30000+104000) = $134000 under FIFO

6. & 7. Total cost of goods sold and ending inventory in weighted average method

i.e. As calculated in table, total cost of goods sold for 9000 unis will be $ 101580

Cost of Closing Inventory will be (11000 units) = $128420 under weighted average method

Date Opening Inventory Purchase Sale Closing Inventory units Rate Amount units Rate Amount units Rate Amount units Rate Amount 1-Jan 3000 12 36000 3000 12 36000 11-Apr 9000 10 90000 3000 12 36000 9000 10 90000 1-May 3000 12 36000 9000 10 90000 1-Jun 8000 13 104000 9000 10 90000 8000 13 104000 3-Jul 6000 10 60000 3000 10 30000 8000 13 104000 Total cost of goods sold 9000 96000

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