E9-11 Homestake Industries 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, Homestake managers expect sales of $295,000. net purchases between $159,000 and $182.000, and operating expenses of $83,000. Inventories at March 31 are budgeted as follows: FIFO, $85,000; LIFO, $78,000. Required Create a spreadsheet to compute estimated net income four ways: Net purchases may be $159,000 or $182,000 for March under both FIFO and LIFO. Format your answer as follows:

3 B C HOMESTAKE INDUSTRIES Estimated Income under FIFO and LIFO March 20XX 4 E FIFO LIFO FIFO LIFO 6 7 Sales $295.000 $295,000 $295,000 $295,000 8 9 Cost of goods sold 10 Beginning inventory 63,000 63,000 63.000 11 Net purchases 159,000 159,000 182.000 63,000 182,000 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 profit 19 Operating expenses 83,000 83.000 83,000 83,000 20 21 Net income