Required information Exercise 5-6A 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 during Year 2: Jan. 1 Apr. 1 Oct. 1 Beginning Inventory Purchased Purchased 350 units @ $ 39 3,000 units @ $ 44 550 units @ $ 47 During Year 2, Parvin sold 3,600 units of inventory at $85 per unit and incurred $46,500 of operating expenses. Parvin currently uses the FIFO method but is considering a change to LIFO. All transactions are cash transactions. Assume a 40 percent income tax rate. Parvin started the period with cash of $85,000, inventory of $13,650, common stock of $60,000, and retained earnings of $38,650. Exercise 5-6A Part b b. Prepare income statements using FIFO and LIFO. PARVIN COMPANY Income Statements For the Year Ended December 31, Year 2 FIFO Cost of goods sold: Cost of goods sold LIFO S