During Year 2, Parvin sold 2,700 units of inventory at $90 per unit and incurred $41,500 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 $75,000, inventory of $12,000, common stock of $50,000, and retained earnings of $37,000.

C. Determine the amount of income tax that Parvin would pay using each cost flow method

Required Information [The following information applies to the questions displayed below.] The following information pertains to the inventory of Parvin Company during Year 2: Jan. 1 Apr. 1 Oct. 1 Beginning Inventory Purchased Purchased 480 units @ $30 2,eee units @ $35 600 units @ $38 During Year 2. Parvin sold 2,700 units of inventory at $90 per unit and incurred $41.500 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 $75.000, inventory of $12,000. common stock of $50,000, and retained earnings of $37.000. c. Determine the amount of income tax that Parvin would pay using each cost flow method. Income tax paid using FIFO Income tax paid using LIFO