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: Units Unit Cost $12 2,880 Inventory, December 31, prior year For the current year: Purchase, April 11 Purchase, June 1 Sales ($60 each) Operating expenses (excluding income tax expense) 8,880 7,870 10,860 13 18 $193,500 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 year Case A FIFO $ 651,600 Case B LIFO $ 651,600 Sales revenue Cost of goods sold: Beginning inventory Purchases $ $ 34,560 257.100 34,560 257.100 291,660 291,660 Goods available for sale Ending inventory Cost of goods sold Gross profit Operating expenses Pretax income 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: Units 2,889 Unit Cost $12 Inventory, December 31, prior year For the current year: Purchase, April 11 Purchase, June 1 Sales ($60 each) Operating expenses (excluding income tax expense) 8,880 7,870 10,860 13 18 $193,500 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 FIFO LIFO Difference Pretax income Ending inventory