11 Problem: Module 2 Textbook Problem 11 Learning Objective: 2-7 Show how different inventory cost flow methods (specific identification, FIFO, LIFO, and weighted average) affect financial statements 0.5 points The following information pertains to the inventory of Parvin Company Hint Jan. 1 Apr. 1 Oct. 1 Beginning inventory Purchased Purchased 300 units 2,500 units 900 units $22 927 $28 Print e During the year, Parvin sold 3,145 units of Inventory at $40 per unit and incurred $15,700 of operating expenses. Parvin currently uses the FIFO method but is considering a change to LIFO. All transactions are cash transactions. Assume a 30 percent income tax rate Parvin started the period with cash or $92,400, inventory of $6,600, common stock of $74,000, and retained earnings of $25,000. Required a. Prepare income statements using FIFO and LIFO b. Determine the amount of income tax that Parvin would pay using each cost flow method, c. Determine the cash flow from operating activities under FIFO and LIFO. Complete this question by entering your answers in the tabs below. Required A Required B Required c Prepare income statements using FIFO and LIFO. (Round intermediate calculations and final answers to the nearest whole dollar amount.) c. Determine the cash flow from operating activities under FIFO and LIFO. Complete this question by entering your answers in the tabs below. ats Required A Required B Required C Hint Prepare income statements using FIFO and LIFO. (Round Intermediate calculations and final answers to the nearest whole dollar amount.) Print PARVIN COMPANY Income Statements For the Year Ended December 31 FIFO LIFO Sales $ 125,800 $ 125,800 Cost of goods sold 83,760 Gross margin Operating expenses 15,700 15,700 Income before tax (15,700) (15,700) Net income (Required A Required B > 11 During the year, Parvin sold 3,145 units of inventory at $40 per unit and incurred $15.700 of operating expenses. Parvin currently uses the FIFO method but is considering a change to LIFO. All transactions are cash transactions. Assume a 30 percent income tax rate. Parvin started the period with cash of $92,400, inventory of $6,600, common stock of $74,000, and retained earnings of $25,000. 0.5 points Required a. Prepare income statements using FIFO and LIFO. b. Determine the amount of income tax that Parvin would pay using each cost flow method. c. Determine the cash flow from operating activities under FIFO and LIFO. Hint Print Complete this question by entering your answers in the tabs below. Required A Required B Required c Determine the amount of income tax that Parvin would pay using each cost flow method. FIFO LIFO Income tax