Question :
Evaluate the amounts for COGS on the income statement and the ending inventory (at cost) on the balance sheet given the subsequent inventory purchase and sale information of Orange Corporation. Consider a perpetual inventory system.
Beginning Inventory 100 units @ $30
2/10/13 Purchase 200 units @ $35
4/15/13 Purchase 300 units @ $40
6/18/13 Purchase 250 units @ $45
9/22/13 Purchase 125 units @ $50
Sales:
3/1/13 Sale 250 units
4/30/13 Sale 100 units
8/2/13 Sale 325 units
1) Evaluate COGS and Ending Inventory (at cost) under FIFO perpetual
2) Evaluate COGS and Ending Inventory (at cost) under LIFO perpetual
3) Evaluate COGS and Ending Inventory (at cost) under Moving Average
Extra Problems (Using the information above):
1) Consider Orange Corporation uses FIFO perpetual for internal accounting purposes throughout the year, but reports using LIFO perpetual for external reporting. Consider a zero ($0) balance in the Allowance to reduce inventory to LIFO at the starting of the year. What is the journal entry required to establish the LIFO reserve for Orange Corporation?
2) Consider Orange Corporation reports using perpetual LIFO, apply the Lower of Cost or Market (LCM) rules to evaluate what value Orange Corporation should report in its 12/31/13 financial statements for ending inventory. Replacement costs for the inventory at 12/31/13 are $11,000; the projected selling price for the inventory on hand at 12/31/13 is $15,000 with evaluated selling related costs of $2,000. Orange Corporation computes a 10% gross profit percentage on sales.