Exercise 8-15 The board of directors of Crane Corporation is considering whether

Question

Exercise 8-15 The board of directors of Crane Corporation is considering whether or not it should instruct the accounting department to shift from a first-in, first-out (FIFO) basis of pricing inventories to a last-in, first-out (LIFO) basis. The following information is available Sales 20,800 units @ $55 5,600 units@ 22 6,000 units @ 24 10,100 units@ 28 7,200 units @ 33 8,100 units @? Inventory, January 1 Purchases Inventory, December 31 Operating expenses $220,000 Prepare a condensed income statement for the year on both bases for comparative purposes Crane Corporation Condensed Income Statement For the year ended December 31 First-in, first-out Last-in, first-out

Explanation / Answer

First-in, First-out Last-in, First-out Sales 1144000 1144000 Cost of goods sold: Inventory, Jan. 1 123200 123200 Purchases 664400 664400 Cost of goods available 787600 787600 Inventory, Dec. 31 262800 183200 Cost of Goods Sold 524800 604400 Gross Profit 619200 539600 Operating Expenses 220000 220000 Net Income / (Loss) 399200 319600

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