P7-3 (Algo) Evaluating Four Alternative Inventory Methods Based on Income and Cash Flow LO7-2, 7-3

Method (LIFO or FIFO or No Difference)______

Tax Savings _______

P7-3 (Algo) Evaluating Four Alternative Inventory Methods Based on Income and Cash Flow L07-2, 7-3 [The following information applies to the questions displayed below.] At the end of January of the current year, the records of Donner Company showed the following for a particular item that sold at $17.00 per unit: Transactions Inventory, January 1 Purchase, January 12 Purchase, January 26 Sale Sale Units 500 660 120 (400) (200) Amount $2,800 5,016 1,152 P7-3 Part 3 3. Between FIFO or LIFO, which method would result in the lower income tax expense? Assume a 30 percent average tax rate. (Round your answer to 2 decimal places.) Tax Savings Method