Dublin Company has a beginning inventory of $42,000 using LIFO. During the third quarter, they sell inventory which cost $120,000, or $32,000 more than they purchased, thus eroding away the inventory. They plan to replace the inventory by year-end at a cost of $37,500.

1. Prepare the cost of goods sold entry for the third quarter.

Limerick Company has $400,000 of sales and a related cost of goods sold and operating expenses of $280,000 for the first quarter. Their tax rate is 30% (combined federal and state). During the first quarter, they had an extraordinary gain from a legal settlement of $170,000.

2. Prepare the first quarter income statement.