The management of Tinker Inc. asks your help in determining the comparative effe

Question

The management of Tinker Inc. asks your help in determining the comparative effects of the FIFO and LIFO inventory cost flow methods. For 2014, the accounting records show these data Inventory, January 1 (10,000 units) Cost of 120,000 units purchased Selling price of 98,000 units sold Operating expenses $35,000 468,500 750,000 124,000 Units purchased consisted of 35,000 units at $3.70 on May 10; 60,000 units at $3.90 on August 15; and 25,000 units at $4.20 on November 20, Income taxes are 28% (a) Prepare comparative condensed income statements for 2014 under FIFO and LIFO TINKER, INC. Condensed Income Statements For the Year Ended December 31, 2014 FIFO LIFO Sales 750,000 750,000 Cost of Goods Sold 35,000 468,500 503500 132300 35,000 468,500 503500 Beginning Inventory Cost of Goods Purchased Cost of Goods Available for Sale Less Ending Inventory (123000) Cost of Goods Sold 371200 371200 Gross Profit 378800 124000 2548001 378800 124000 245500 Operating Expenses Income before Income Taxes Income Tax Expense 71344 (68740) Net Income/(Loss) 183456| 176760

Explanation / Answer

FIFO LIFO $ $ Sales 750,000 750,000 Cost of goods sold: Beginning inventory 35,000 35,000 Cost of goods purchased 468,500 468,500 Cost of goods available for sale 503,500 503,500 Less Ending inventory 132,300 116,400 Cost of goods sold 371,200 387,100 Gross Profit 378,800 362,900 Operating expenses 124,000 124,000 Income before Income Taxes 254,800 238,900 Income tax expense 71,344 66,892 Net Income / ( Loss) 183,456 172,008

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.