Use the following to answer questions 11-14 Ace Industries had the following inv

Question

Use the following to answer questions 11-14 Ace Industries had the following inventory transactions occur during 2016: /1/2016 Purchase /14/2016 Purchase /1/2016 Purchase Units 18 31 Cost/unit $45 S47 $49 The company sold 51 units at $63 each and has a tax rate of 30%. ·71-5?ao 11. Assuming that a periodie inventory system is used, what is the company's gross profit using LIFO? (rounded to whole dollars) A) $2,441 B) $2,365 C) $848 D) $772 12. Assuming that a periodic inventory system is used, what is the company's after-tax income using LIFO? (rounded to whole dollars) A) $772 B) $848 C) $594 D) $540 13. Assuming that a periodic inventory system is used, what is the company's gross profit using FIFO? (rounded to whole dollars) A) $2,441 B) $2,365 C) $848 D) $772 14. Assuming that a periodic inventory system is used, what is the company's after-tax income using FIFO? (rounded to whole dollars) A) $772 B) $848 C) $594 D) $540

Explanation / Answer

Under lifo

Cogs=units purchased - ending inventory=18×45+31×47+22×49-(2×47)+(18×45)

=3345-904=2441

Revenue=63×51=3213

Gp=3213-2441=772

After tax profit =772*(1-.30)=540.4

Under fifo

Cogs=18×45+31×47+22×49-(20×49)=2233

Revenue=3213

Gp=3213-2233=980

After tax profit=980×(1-.3)

=686

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