Problem 6-4A

The management of Tinker 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 (10,000 units)		$ 36,000
Cost of 120,000 units purchased		470,820
Selling price of 97,700 units sold		750,000
Operating expenses		127,200

Units purchased consisted of 34,900 units at $3.70 on May 10; 60,600 units at $3.90 on August 15; and 24,500 units at $4.30 on November 20. Income taxes are 30%.

(a) Prepare comparative condensed income statements for 2014 under FIFO and LIFO.