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Exercise 197 a-c Exercise 197 a-c Tyler Company reported the following summarized annual data at the end of 2018: Sales revenue Cost of goods sold*
Exercise 197 a-c
Exercise 197 a-c Tyler Company reported the following summarized annual data at the end of 2018: Sales revenue Cost of goods sold* Gross margin Operating expenses Income before income taxes$120,000 $1,000,000 600,000 400,000 280,000 *Based on an ending FIFO inventory of $240,000 The income tax rate is 30%. The controller of the company is considering a switch from FIFO to LIFO. He has determined that on a LIFO basis, the ending inventory would have been $150,000. Restate the summary information on a LIFO basis Sales revenue Cost of goods sold Gross margin Operating expenses Income before income taxes What effect, if any, would the proposed change have on Tyler's income tax expense, net income, and cash flows? FIFO LIFO Income tax expense Net income Cash effect SHOW ANSWER If you were an owner of this business, what would your reaction be to this proposed change? Owners of the business may favor the ncome taxes. basis since more cash will be available for use in the business results in more cash being retained in the business since less is paid out for SHOWStep by Step Solution
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