2. Kate Company uses the Last-in, First-out (LIFO) method for valuing its ending inventory. The following inventory information is available at the end of the year: (Mark as 9%) Kate Company Income Statement For the year ended December 31 Sales........ $50,000 Cost of goods sold. 23,000 Gross profit. $27,000 Expenses 13,000 Income before taxes .... $14,000 Under LIFO method, Kate Company's ending inventory was $8,200. Kate Company's accountant determined that had the company used FIFO, the ending inventory would have been $8,500. a) Determine what the income before taxes would have been, had Kate Co. used the FIFO method of inventory valuation instead of LIFO. b) What would be the difference in income taxes between LIFO and FIFO, assuming a 30% tax rate? C) If Kate Co. wanted to lower the amount of income taxes to be paid, which method would it choose