. Prepare a separate income statement through pretax income that details cost of

Question

.

Prepare a separate income statement through pretax income that details cost of goods sold for (a) Case A: FIFO and (b) Case B: LIFO. (Loss amounts should be indicated with a minus sign.)

2) Compute the difference between the pretax income and the ending inventory amount for the two cases.


Please show all the work in a detailed manner.

The following information applies to the questions displayed below.j Beck Inc. uses a periodic inventory system. At the end of the annual accounting period, December 31, 2015, the accounting records provided the following information for product 2: Units Unit Cost Inventory, December 31, 2014 For the year 2015: 6006 19,600 10,600 8,600 16,600 10 12 Purchase, March 5 Purchase, September 19 Sale ($29 each) Sale ($31 each Operating expenses (excluding income tax expense) $506,000

Explanation / Answer

Answer

FIFO

Cost of Goods available for sale

Cost of Goods Sold

Ending Inventory

Units

Cost/unit

COG for sale

Units sold

Cost/unit

COGS

Units

Cost/unit

Ending inventory

Beginning Inventory

7600

6

45600

7600

6

45600

0

6

0

Purchases:

Mar-05

19600

10

196000

17600

10

176000

2000

10

20000

Sep-19

10600

12

127200

0

12

0

10600

12

127200

TOTAL

37800

$368,800

25200

$221,600

12600

$147,200

LIFO

Cost of Goods available for sale

Cost of Goods Sold

Ending Inventory

Units

Cost/unit

COG for sale

Units sold

Cost/unit

COGS

Units

Cost/unit

Ending inventory

Beginning Inventory

7600

6

45600

0

6

0

7600

6

45600

Purchases:

Mar-05

19600

10

196000

14600

10

146000

5000

10

50000

Sep-19

10600

12

127200

10600

12

127200

0

12

0

TOTAL

37800

$368,800

25200

$273,200

12600

$95,600

Case A: FIFO

Case B: LIFO

Sales Revenue

$     7,64,000.00

$     7,64,000.00

Cost of Goods Sold:

Beginning Inventory

$           45,600.00

$        45,600.00

Purchases

$       3,23,200.00

$     3,23,200.00

Goods Available for Sale

$       3,68,800.00

$     3,68,800.00

Ending Inventory

$     (1,47,200.00)

$      (95,600.00)

Cost of Goods Sold

$     2,21,600.00

$     2,73,200.00

Gross Profits

$     5,42,400.00

$     4,90,800.00

Operating Expenses

$     5,06,000.00

$     5,06,000.00

Pretax Income/Loss

$         36,400.00

$      (15,200.00)

FIFO

LIFO

Difference

Pre-Tax Income

$           36,400.00

$      (15,200.00)

$        51,600.00

Ending Inventory

$       1,47,200.00

$         95,600.00

$        51,600.00

FIFO

Cost of Goods available for sale

Cost of Goods Sold

Ending Inventory

Units

Cost/unit

COG for sale

Units sold

Cost/unit

COGS

Units

Cost/unit

Ending inventory

Beginning Inventory

7600

6

45600

7600

6

45600

0

6

0

Purchases:

Mar-05

19600

10

196000

17600

10

176000

2000

10

20000

Sep-19

10600

12

127200

0

12

0

10600

12

127200

TOTAL

37800

$368,800

25200

$221,600

12600

$147,200

LIFO

Cost of Goods available for sale

Cost of Goods Sold

Ending Inventory

Units

Cost/unit

COG for sale

Units sold

Cost/unit

COGS

Units

Cost/unit

Ending inventory

Beginning Inventory

7600

6

45600

0

6

0

7600

6

45600

Purchases:

Mar-05

19600

10

196000

14600

10

146000

5000

10

50000

Sep-19

10600

12

127200

10600

12

127200

0

12

0

TOTAL

37800

$368,800

25200

$273,200

12600

$95,600

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