Exercise 5-6A Income tax effect of shifting from FIFO to LIFO LO 5-1 [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 500 units @ $ 34 2,350 units @ $ 39 700 units @ $ 42 During Year 2, Parvin sold 3,200 units of inventory at $100 per unit and incurred $48,000 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 $88,000, inventory of $17,000, common stock of $63,000, and retained earnings of $42,000. Exercise 5-6A Part d to be deducted should be indicated with minus d. Determine the cash flow from operating activities under FIFO and LIFO. (Amour sign.) Parvin Company Cash Flows from Operating Activities FIFO LIFO Cash flows from operating activities: Cash inflow from customers Cash outflow for inventory Cash outflow for operating expenses Cash outflow for income tax expense Net cash flow from operating activities 0 $ 0