Emily 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				2,800			$	15
For the current year:
Purchase, April 11				8,930				16
Purchase, June 1				7,960				21
Sales ($58 each)				10,850
Operating expenses (excluding income tax expense)	$	194,000

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.

1
	Case A		Case B
	FIFO		LIFO
Sales revenue		629300		629300
Cost of goods sold:	42000		42000
Beginning inventory
Purchases
Goods available for sale
Ending inventory
Cost of goods sold
Gross Profit
Operating expenses
Pretax income

2. Compute the difference between the pretax income and the ending inventory amount for the two cases.

2
	Case A	Case B
	FIFO	LIFO	Difference
Pretax income
Ending inventory