Required information E7-7 (Algo) Analyzing and Interpreting the Financial Statement Effects of LIFO and FIFO LO7-2, 7-3 [The following information applies to the questions displayed below.) Emily Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 2: Unit Units Cost 2,900 $13 14 Inventory, December 31, prior year For the current year: Purchase, April 11 Purchase, June 1 Sales ($53 each) Operating expenses (excluding income tax expense) 8,830 7,930 10,960 $191,500 1. Prepare a separate income statement through pretax income that details cost of goods sold for ( LIFO. EMILY COMPANY Income Statement For the Year Ended December 31, current year Case A FIFO Case B LIFO Sales revenue Cost of goods sold: Beginning inventory Purchases $ $ 37,700 274,290 37,700 274,290 311,990 311,990 Goods available for sale Ending inventory Cost of goods sold Gross profit Operating expenses Pretax income Emily Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 2: Units Unit Cost $ 13 2,900 Inventory, December 31, prior year For the current year: Purchase, April 11 Purchase, June 1 Sales ($53 each) Operating expenses (excluding income tax expense) 8,830 7,930 10,960 $191,500 E7-7 Part 2 2. Compute the difference between the pretax income and the ending inventory amount for the two cases. Comparison of Amounts Case A Case B LIFO Difference Pretax income Ending inventory