Pharoah Company had the following inventory transactions occur during 2017: Unit

Question

Pharoah Company had the following inventory transactions occur during 2017:

Units

Cost/unit

Feb. 1, 2017

Purchase

Mar. 14, 2017

Purchase

May 1, 2017

Purchase

Pharoah Company had the following inventory transactions occur during 2017:

Units

Cost/unit

Feb. 1, 2017

Purchase

112 $112

Mar. 14, 2017

Purchase

192 $117

May 1, 2017

Purchase

136 $122
The company sold 316 units at $156 each and has a tax rate of 30%. Assuming that a periodic inventory system is used and operating expenses of $3100, what is the company’s after-tax income using FIFO? (rounded to whole dollars)

$5981 $8544 $9724 $6807

Explanation / Answer

Calculate after tax income under FIFO :

so answer is d) $6807

Sales (316*156) 49296 Cost of goods sold (112*112+192*117+12*122) 36472 Gross profit 12824 Operating expenses 3100 Income before tax 9724 Income tax 2917.20 Net income 6806.80

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