The following information pertains to the inventory of Parvin Company:

During the year, Parvin sold $2,700$ units of inventory at $$90$ per unit and incurred $$41,500$ 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 $$75,000,$ inventory of $$12,000,$ common stock of $$50,000,$ and retained earnings of $$37,000.$

Required

a$.$ Prepare income statements using FIFO and LIFO.

b$.$ Determine the amount of income tax that Parvin would pay using each cost flow method.

c$.$ Determine the cash flow from operating activities under FIFO and LIFO.

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Prepare income statements using FIFO and LIFO.