Question
Taylor Corporation reports inventory and cost of goods sold based on calculations from a LIFO periodic inventory system. The companys records under this system reveal
Taylor Corporation reports inventory and cost of goods sold based on calculations from a LIFO periodic inventory system. The companys records under this system reveal the following inventory layers at the beginning of 2021 (listed in chronological order of acquisition):
15,000 units @ $10 | $ | 150,000 | |||||
20,000 units @ $15 | 300,000 | ||||||
Beginning inventory | $ | 450,000 | |||||
During 2021, 40,000 units were purchased for $20 per unit. Due to unexpected demand for the company's product, 2021 sales totaled 49,000 units at various prices, leaving 26,000 units in ending inventory. Required: 1. Calculate the amount to report for cost of goods sold for 2021. 2. Determine the amount of LIFO liquidation profit that the company must report in a disclosure note to its 2021 financial statements. Assume an income tax rate of 25%. 3. If the company decided to purchase an additional 9,000 units at $20 per unit at the end of the year, how much income tax currently payable would be saved?
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