The management of Felipe Inc. is reevaluating the appropriateness of using its present inventory cost flow method, which is average-cost. The company requests your help in determining the results of operations for 2017 if either the FIFO or the LIFO method had been used. For 2017, the accounting records show these data:

Inventories				Purchases and Sales
Beginning (11,200 units)		$22,400		Total net sales (288,000 units)		$1,195,200
Ending (27,200 units)				Total cost of goods purchased (304,000 units)		943,200

Purchases were made quarterly as follows.

Quarter		Units		Unit Cost		Total Cost
1		80,000		$2.85		$228,000
2		64,000		3.00		192,000
3		64,000		3.15		201,600
4		96,000		3.35		321,600
		304,000				$943,200

Operating expenses were $130,000, and the companys income tax rate is 40%.

Prepare comparative condensed income statements for 2017 under FIFO and LIFO. Felipe INC. Condensed Income Statements FIFO LIFO Sales Revenues ,195,200 1,195,200 Cost of Goods Sold Beginning Inventory Cost of Goods Purchased Cost of Goods Available for Sale Ending Inventory 22,400 22,400 943,200 943,200 Gross Profit/ (Loss) Operating Expenses Income before Income Taxes Income Tax Expense Net Income/Loss) 130,000 130,000 Income Tax