QUESTIONS 54-60. PLEASE. The management of Utley Inc. asks your help in determin

Question

QUESTIONS 54-60. PLEASE.

The management of Utley Inc. asks your help in determining the comparative effects of the FIFO and LIFO inventory cost flow methods. For 2008 the accounting records show these data Inventory, January 1 (10,000 units) Cost of 120,000 units purchased Selling price of 100,000 units sold Operating expenses $45,000 509,500 665,000 130,000 Units purchased consisted of . 35,000 units at $4.50 on May 10; · 60,000 units at $4.20 on August 15; and · 25,000 units at $4.00 on November 20. Income taxes are 10%. Complete the comparative condensed income statements for 2008 under FIFO and LIFO FIFO 54 LIFO Sales COGS Beginning Inventor Add: Purchases Total Available For Sale Less: Ending Invento Cost of Goods Sold Gross Profit Less: Operating Expenses Profit Before Taxes Income Tax Profit 56 57. 59. 58. 60.

Explanation / Answer

Answer:-

Working note:-

Comprative Income statementsfor 2008 Particulars FIFO $ LIFO $ Sales (a) 665000 665000 COGS (b) 433500 419500 Beginning Inventory 45000 45000 ADD:- Purchases 509500 509500 Total Availble for sales 554500 554500 LESS:- Ending Inventory 121000 135000 Cost of goods sold 433500 419500 Gross Profit (a-b) 231500 245500 Less: Opreating Expenses 130000 130000 Profit Before taxes 101500 115500 Income Taxes 10% 10150 11550 Profit 91350 103950

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