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. Transactions Units Unit Cost (a) Inventory, December 31, 2011 500 $ 10 For the year 2012: (b) Purchase, April 11 800 8 (c) Purchase, June 1 700 12 (d) Sale, May 1 (sold for $38 per unit) 500 (e) Sale, July 3 (sold for $38 per unit) 520 (f) Operating expenses (excluding income tax expense), $19,000 Required: (1) Calculate the number and cost of goods available for sale. (2) Calculate the number of units in ending inventory.

The number and costs of goods available for sales are 2000 units and $19,800. The ending inventory in units for Orion Iron Corp. is 980 units.

What is Inventory?

Inventory or stock refers to the goods and materials of the entity that it owns for the ultimate purpose of sale, production, or use. Inventory management is a discipline primarily about determining the nature and placement of assets.

Given Information,

Inventory, December 31, 2011 500 $10

Purchase, April 11,2012 800 $8

Purchase, June 1,2012 700 $12

Sale, May 1 (sold for $38 per unit) 500

Sale, July 3 (sold for $38 per unit) 520

Operating expenses (excluding income tax expense), $19,000

1) Let's calculate the number and costs of goods available for sale:

[tex]\rm\, Number \,of \,Units\, Available\, for \,Sale = Beginning \,Inventory \,(Units) \, + Purchases \,(Units) \,[/tex]

[tex]\rm\, Number \,of \,Units\, Available\, for \,Sale = 500+ 800+700\\\\\rm\, Number \,of \,Units\, Available\, for \,Sale = 2,000\,Units[/tex]

2) Ending Inventory in Units:

[tex]\rm\,\\Ending\, Inventory\, in\, Units\, = Number \,of\, Goods\, Available\, for\, Sale\, (Units)\, - Sales\, (Units)\\ \rm\,\\Ending\, Inventory\, in\, Units\, = [500+ 800+700 - (500+ 520) ]\\\\\\\\rm\,Ending\, Inventory\, in\, Units\, = 2,000\,Units - 1,020 \,Units\\\\\rm\,Ending\, Inventory\, in\, Units\, = 980\, Units[/tex]

Cost of goods available for sale:

[tex]\rm\,Cost \,of\,Goods\,Available\,for\,Sale = Beginning\, Inventory \, (Units) \,+ \,Purchases \,(Units)[/tex]

[tex]\rm\,Cost \,of\,Goods\,Available\,for\,Sale = [500 \times \$10(Per\,Unit)]+[(800\times \$8(Per\,Unit)]+(700\times\$12(Per\,Unit)]\\\\Cost \,of\,Goods\,Available\,for\,Sale = [ \$5,000 + \$6,400+ \$ 8,400 ]\\\\Cost \,of\,Goods\,Available\,for\,Sale = \$ 19,800[/tex]

Hence, The number of units available for sale is 2000 units and costs of goods available for sale are $19,800 and the ending inventory in units is 980 units.

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