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 2,940 Cost $11 Inventory, December 31, prior year For the current year Purchase, April 11 Purchase, June 1 Sales (558 each) Operating expenses (excluding income tax expense) 8,860 7,970 10,810 12 17 $186,000 E7-7 Part 1 Required: 1. Prepare a separate income statement through pretax income that details cost of goods sold for (a) Case A: FIFO and (b) Case B: LIFO EMILY COMPANY Income Statement For the Year Ended December 31. current wear Required information Required: 1. Prepare a separate income statement through pretax income that details cost of goods sold for (a) Case A: FIFO and (b) Case B: LIFO. EMILY COMPANY Income Statement For the Year Ended December 31, current year Case A FIFO $ 626,980 Case B LIFO $ Sales revenue Cost of goods sold: 626,980 Goods available for sale 0 Cost of goods sold 9 Dreu 2 Che 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: Units 2,940 Unit Cost $11 Inventory, December 31, prior year For the current year Purchase, April 11 Purchase, June 1 Sales ($58 each) Operating expenses (excluding income tax expense) 8,860 7,970 10,810 12 17 $186,000 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 FIFO LIFO Difference Pretax income Ending inventory 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 2,940 Cost $11 Inventory, December 31, prior year For the current year! Purchase, April 11 Purchase, June 1 Sales (S58 each) Operating expenses (excluding income tax expense) I 8,860 7,970 10,810 12 17 $186,000 E7-7 Part 3 3. Which inventory costing method may be preferred for income tax purposes? Which inventory couting method may be preferred for income tax purposes? 14