Exercise 6-49 Effects of Inventory Costing Methods

Borgia Enterprises has the following statement of earnings data available for 2018:

Sales revenue	$737,200
Operating expenses	243,700
Interest expense	39,500
Income tax rate	34%

Borgia uses a perpetual inventory accounting system and the weighted average cost method. Borgia is considering adopting the FIFO method for costing inventory. Borgia's accountant prepared the following data:

	If Weighted Average Cost Used		If FIFO Used
Ending inventory	$ 61,850		$ 80,200
Cost of goods sold	403,150		384,800

Required:

1. Compute income before taxes, income tax expense, and net income for both of the inventory costing methods (rounded to the nearest dollar).

	Weighted Average Cost	FIFO
Income before taxes	$	$
Income tax expense / Tax savings due to loss	$	$
Net income	$	$