Exercise 5-6A Income tax effect of shifting from FIFO to LIFO LO 5-1

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The following information pertains to the inventory of Parvin Company during Year 2:

Jan. 1	Beginning Inventory	800	units	@	$	35
Apr. 1	Purchased	2,800	units	@	$	40
Oct. 1	Purchased	1,000	units	@	$	43

During Year 2, Parvin sold 4,200 units of inventory at $95 per unit and incurred $45,500 of operating expenses. Parvin currently uses the FIFO method but is considering a change to LIFO. All transactions are cash transactions. Assume a 40 percent income tax rate. Parvin started the period with cash of $83,000, inventory of $28,000, common stock of $58,000, and retained earnings of $53,000.

Exercise 5-6A Part a

Required a. Record the above transactions in general journal form and post to T-accounts using (1) FIFO and (2) LIFO. Use a separate set of journal entries and T-accounts for each method. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal entry worksheet 2 3 5 6 Record entry merchandise inventory purchased for cash. Note: Enter debits before credits. Date General Journal Debit Credit Apr 01 Record entry Clear entry View general journal Journal entry worksheet