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ncome is to be evaluated under four different situations as follows: a. Prices are rising: 1) Situation A: FIFO is used. 2) Situation B: LIFO
ncome 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. 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, 290 units; purchases, 410 units; ending inventory, 180 units; and operating expenses, $3,300. The income tax rate is 40%. Required: 1. Complete the following tabulation for each situation. In Situations A and B (prices rising), assume the following: beginning inventory, 290 units at $8=$2,320; purchases, 410 units at $10=$4,100. In Situations C and D (prices falling), assume the opposite; that is, beginning inventory, 290 units at $10=$2,900; purchases, 410 units at $8=$3,280. Use periodic inventory procedures. 2. Complete the following sentence: 3. 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, 290 units at $8=$2,320; purchases, 410 units at $10=$4,100. In Situations C and D (prices falling), assume the opposite; that is, beginning inventory, 290 units at $10=$2,900; purchases, 410 units at $8=$3,280. Use periodic inventory procedures. (Round your answers to nearest dollar amount.)
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