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E7-7 Analyzing and Interpreting the Financial Statement Effects of LIFO and FIFO LO7-2, 7-3 [The following information applies to the questions displayed below.] Broadhead Company

E7-7 Analyzing and Interpreting the Financial Statement Effects of LIFO and FIFO LO7-2, 7-3

[The following information applies to the questions displayed below.]

Broadhead Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 2:

Units Unit Cost
Inventory, December 31, prior year 2,810 $ 11
For the current year:
Purchase, April 11 8,970 9
Purchase, June 1 7,920 14
Sales ($56 each) 10,890
Operating expenses (excluding income tax expense) $ 193,000

E7-7 Part 1

Required:

1. Prepare a separate income statement through pretax income that details cost of goods sold for (a) Case A: FIFO and (b) Case B: LIFO.

BROADHEAD COMPANY
Income Statement
For the Year Ended December 31, current year
Case A Case B
FIFO LIFO
Cost of goods sold:
Goods available for sale 0 0
Cost of goods sold

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