The following information pertains to the inventory of Parvin Company

Jan 1 Beginning inventory 500 units @ $17

April 1 Purchased 2,700 units @ $22

Oct 1 Purchased. 800 unit. @$23

During the year, Parvin sold 3,400 units of inventory at $42 per unit and incurred $16,900 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 stated the period with cash of $83,500, common stock of $69,000, and retained earnings of $23,000.

Required

a. Prepare income statements using FIFO and LIFO

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

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

I need help understanding the LIFO method better.