Required information Exercise 5-6 Income tax effect of shifting from FIFO to LIFO LO 5-1 (The following information applies to the questions displayed below.) The following information pertains to the inventory of Parvin Company for Year 3: Jan. 1 Apr. 1 Oct. 1 Beginning inventory Purchased Purchased 400 units @ $16 3,000 units @ $21 1,200 units @ $22 During Year 3, Parvin sold 3,910 units of inventory at $43 per unit and incurred $17,700 of operating expenses. Parvin currently uses the FIFO method but is considering a change to LIFO. All transactions are cash transactions. Assume a 30 percent income tax rate. Parvin started the period with cash of $217,100, inventory of $6,400, common stock of $200,000, and retained earnings of $23,500 Exercise 5-6 Part a a. Prepare income statements using FIFO and LIFO. (Round intermediate calculations and final answers to the nearest whole dollar amount.) PARVIN COMPANY Income Statements For the Year Ended December 31, Year 3 FIFOLIFO Sales $ 168,130 $ 168,130 Cost of goods sold Gross margin Operating expenses Income before tax Income tax expense Net income