Walnut Lubricants is considering a change from the LIFO inventory method to the FIFO method. Managers are concerned about the effect of this change on income tax expense and reported net income. If the change is made, it will become effective on March 1. Inventory on hand at February 28 is \(\$ 63,000\). During March, Walnut managers expect sales of \(\$ 250,000\), net purchases between \(\$ 159,000\) and \(\$ 182,000\), and operating expenses, excluding income tax, of \(\$ 83,000\). The income tax rate is 30 percent. Inventories at March 31 are budgeted as follows: FIFO, \(\$ 85,000\); LIFO, \(\$ 78,000\).

\section*{Required}

Create a spreadsheet model to compute estimated net income for March under FIFO and LIFO. Format your answer as follows:

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123. Sales B C D E Walnut Lubricants Estimated Income under FIFO and LIFO March 19XX FIFO LIFO FIFO LIFO $250,000 $250,000 $250,000 $250,000 Cost of goods sold 10 Beginning inventory 63,000 63,000 63,000 63,000 11 Net purchases 159,000 159,000 182,000 182,000 12 13 Cost of goods available 14 Ending inventory 85,000 78,000 85,000 78,000 15 16 Cost of goods sold 17 18 Gross margin 19 Operating expenses 83,000 83,000 83,000 83,000 20 21 Income from operations 22 Income tax expense 23 24 Net income 25