P6-4BThe management of Weigel Inc. asks your help in determining the comparative effects of the FIFO and LIFO inventory cost flow methods. For 2014 the accounting records show these data.

Inventory, January 1 (4,000 units) $ 16,000

Cost of 105,000 units purchased 470,500

Selling price of 100,000 units sold 900,000

Operating expenses 185,000

Units purchased consisted of 35,000 units at $4.21 on March 20; 65,000 units at $4.60 on July 24; and 5,000 units at $4.83 on December 12. Income taxes are 30%.

Instructions

(a) Gross profit:

FIFO $456,050

LIFO $450,550

(a) Prepare comparative condensed income statements for 2014 under FIFO and LIFO. (Show computations of ending inventory.)