Question
Income is to be evaluated under four different situations as follows: a. Prices are rising: (1) Situation A: FIFO is used. (2) Situation B: LIFO
Income is to be evaluated under four different situations as follows:
a. Prices are rising:
(1) Situation A: FIFO is used.
(2) Situation B: LIFO is used.
b. Prices are falling:
(1) Situation C: FIFO is used.
(2) Situation D: LIFO is used.
The basic data common to all four situations are sales, 520 units for $20,800; beginning inventory, 300 units; purchases, 410 units; ending inventory, 190 units; and operating expenses, $3,100. The income tax rate is 40%.
Required:
Complete the following tabulation for each situation. In Situations A and B (prices rising), assume the following: beginning inventory, 300 units at $10 = $3,000; purchases, 410 units at $12 = $4,920. In Situations C and D (prices falling), assume the opposite; that is, beginning inventory, 300 units at $12 = $3,600; purchases, 410 units at $10 = $4,100. Use periodic inventory procedures.
Complete the following sentence:
Complete the following sentence regarding the relative effects on the cash position for each situation.
Complete the following tabulation for each situation. In Situations A and B (prices rising), assume the following: beginning inventory, 300 units at $10=$3,000; purchases, 410 units at $12=$4,920. In Situations C and D (prices falling), assume the opposite; that is, beginning inventory, 300 units at $12=$3,600; purchases, 410 units at $10=$4,100. Use periodic inventory procedures. (Round your answers to nearest dollar amount.)
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