The following comparative information is available for Keysor Company for 2014.

LIFO FIFO Sales revenue $86,000 $86,000 Cost of goods sold 38,000 29,000 Operating expenses

(including depreciation) 27,000 27,000 Depreciation 10,000 10,000 Cash paid for inventory purchases 32,000 32,000 Instructions

(a) Determine net income under each approach. Assume a 30% tax rate.

(b) Determine net cash provided by operating activities under each approach. Assume that all sales were on a cash basis and that income taxes and operating expenses, other than depreciation, were on a cash basis.

(c) Calculate the quality of earnings ratio under each approach and explain your findings.

AppendixLO1