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: Unito 2,830 Unit Cost $14 Inventory, December 31, prior year For the current year Purchase, April 11 Purchase, June 1 Sales ($52 each) Operating expenses (excluding income tax expense) 3,960 7,930 10,890 15 20 $185,000 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) Cose B LIFO. EMILY COMPANY Income Statement For the Year Ended December 31, current year Case A FIFO Case B LIFO Icons 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 Case B LIFO Cost of goods sold Goods available for sale Cost of goods sold Chapter Saved Required information E7-7 (Algo) Analyzing and Interpreting the Financial Statement Effects of LIFO and FIFO [The following information applies to the questions displayed below.) Emily Company uses a periodic inventory system. At the end of the annual accounting period, Decembe year, the accounting records provided the following information for product 2: Units 2,830 Unit Cost $14 15 Inventory, December 31, prior year For the current year: Purchase, April 11 Purchase, June 1 Sales ($52 each) Operating expenses (excluding income tax expense) 8,960 7,930 10,890 20 $185,000 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 Pro 7 Mnyt [The following information applies to the questions displayed below.) Emily Company uses a periodic inventory system. At the end of the annual accounting year, the accounting records provided the following information for product 2: Units 2,830 Inventory, December 31, prior year For the current year: Purchase, April 11 Purchase, June 1 Sales ($52 each) Operating expenses (excluding income tax expense) 8,960 7,930 10,890 $185,000 E7-7 Part 3 3. Which inventory costing method may be preferred for income tax purposes? Which inventory costing method may be preferred for income tax purposes