$4$

The Brick Company had cash sales of $$226,200$ for Year $1,$ its first year of operation. On April $2,$ the company purchased $203$ units of inventory at $$210$ per unit. On September $1,$ an additional $152$ units were purchased for $$231$ per unit. The company had $61$ units on hand at the end of the year. The company's income tax rate is $40$ percent. All transactions are cash transactions.

eBook

Required

a$.$ The preceding paragraph describes five accounting events: $(1)$ a sales transaction, $(2)$ the first purchase of inventory, $(3)$ a second purchase of inventory, $(4)$ the recognition of cost of goods sold expense, and $(5)$ the payment of income tax expense. Show the amounts of each event in horizontal statements models, assuming first a FIFO and then a LIFO cost flow.

b$.$ Compute net income using FIFO.

c$.$ Compute net income using LIFO.

e$.$ Which method, FIFO or LIFO, produced the larger amount of assets on the balance sheet?