EFFECTS OF INVENTORY COSTING METHODS ON INCOME TAX PAYMENTS.

Jefferson Enterprises has the following income statement data available for 19x9:

REQUIRED:
1. Compute income before taxes, income taxes expense, and net income for each of the three inventory costing methods.
2. Why are the cost of goods sold and ending inventory amounts different for each of the three methods?

E7-44, EFFECTS OF INVENTORY COSTING METHODS ON CASH OUTFLOWS FOR INCOME TAXES. Kennebeck Stores has the following inventory data:

REQUIRED:
1. Compute ending inventory and cost of goods sold using the FIFO, LIFO, and weighted average methods of inventory accounting.
2. By how much will cash outflows for income taxes differ among the three inventory methods?

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Sales revenue Operating expenses Interest expense Income tax rate $737,200 243,700 39,500 .34 Jefferson uses a periodic inventory accounting system and is considering continuing with the weighted average method or adopting FIFO or LIFO for inventory costing. Jefferson's accountant prepared the following data: Ending inventory Cost of goods sold IF WEIGHTED AVERAGE USED $ 56,400 401,600 IF FIFO USED $ 73,200 384,800 IF LIFO USED $ 41,700 416,300