Required information E7-8 (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.) Givoly Inc. 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 6,000 Unit Cost $10 Inventory, December 31, prior year For the current year: Purchase, March 5 Purchase, September 19 Sale ($25 each) Sale ($33 each) Operating expenses (excluding income tax expense) 8 4 18,000 9,000 8,800 15,000 $ 390,000 E7-8 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. (Loss amounts should be indicated with a minus sign.) Answer is not complete. GIVOLY INC. Income Statement For the Year Ended December 31, current year Case A FIFO $ 715,000 Case B LIFO $ 715,000 Cost of goods sold: Beginning inventory Purchases $ 60,000 180,000 $ 60,000 180,000 Goods available for sale Ending inventory 240,000 |(108,000) 240,000 (156,000) Cost of goods sold Gross profit Operating expenses 583,000 $ 100) 84.000 x 631,000 0,000) Pretax income/loss $ 193,000 X $ 241,000 X 2. Compute the difference between the pretax income and the ending inventory amounts for the two cases. Answer is complete but not entirely correct. Comparison of Amounts Case A Case B FIFO LIFO Difference $ 193,000 $ 241,000 $ (48,000) $ 108,000 $ 156,000 $ (48,000) Pretax income Ending inventory