The Brick Company had cash sales of $$222,500$ for Year $1,$ its first year of operation. On April $2,$ the company purchased $212$ units of inventory at $$220$ per unit. On September $1,$ an additional $159$ units were purchased for $$242$ per unit. The company had $70$ units on hand at the end of the year. The company's income tax rate is $40$ percent. All transactions are cash transactions.

Required

a$.$ The preceding paragraph describes five accounting events: $(1)$ a sales transaction, $(2)$ the first purchase of inventory, $(3)$ a second purchase of inventory, $(4)$ the recognition of cost of goods sold expense, and $(5)$ the payment of income tax expense. Show the amounts of each event in horizontal statements models, assuming first a FIFO and then a LIFO cost flow.

b$.$ Compute net income using FIFO.

c$.$ Compute net income using LIFO.

e$.$ Which method, FIFO or LIFO, produced the larger amount of assets on the balance sheet?

Complete this question by entering your answers in the tabs below.

The preceding paragraph describes five accounting events: $(1)$ a sales transaction, $(2)$ the first purchase of inventory, $(3)$ a second purchase of inventory, $(4)$ the recognition of cost of goods sold expense, and $(5)$ the payment of income tax expense. Show the amounts of each event in horizontal statements models, assuming first a FIFO and then a LIFO cost flow. $($In the Cash Flow column, use the initials OA to designate operating activity, IA for investing activity, FA for financing activity, NC for net change in cash. Enter any decreases to account balances and cash outflows with a minus sign. Not all cells require input.$)$

Show less $A$

THE BRICK COMPANY

Effect of Events on Financial Statements