The management of Vaughn Co. asks your help in determining the comparative effects of the FIFO and LIFO inventory cost flow methods. For 2020, the accounting records provide the following data.

Inventory, January 1 (12,000 units) $48,000

Cost of 100,000 units purchased 462,000

Selling price of 84,000 units sold 735,000

Operating expenses 140,000

Units purchased consisted of 35,000 units at $4.40 on May 10; 35,000 units at $4.60 on August 15; and 30,000 units at $4.90 on November 20. Income taxes are 30%.

Prepare comparative condensed income statements for 2020 under FIFO and LIFO.

VAUGHN CO. Condensed Income Statement

For the Year Ended December 31, 2020

FIFO LIFO

Sales Revenue:

Beginning Inventory:

Cost of Goods Available for Sale

Cost of Goods Purchased

Cost of Goods Sold:

Cost of Goods Sold

Dividends

Ending Inventory

ExpensesGross Profit / (Loss)Income before Income Taxes

Income Tax Expense

Net Income / (Loss)

Operating Expenses

Retained Earnings,

Answer the following questions for management.

(1)		Which inventory cost flow method produces the most meaningful inventory amount for the balance sheet?		FIFO method
(2)		Which inventory cost flow method produces the most meaningful net income?		LIFO method
(3)		Which inventory cost flow method is most likely to approximate actual physical flow of the goods?		FIFO method
(4)		How much additional cash will be available for management under LIFO than under FIFO?		$
(5)		How much of the gross profit under FIFO is illusory in comparison with the gross profit under LIFO?		$

: Hyuyull Prepare comparative condensed income statements for 2020 under FIFO and LIFO. VAUGHN CO. Condensed Income Statement For the Year Ended December 31, 2020 FIFO LIFO > Sales Revenue Cost of Goods Sold Beginning Inventory x Cost of Goods Purchased Cost of Goods Available for Sale 17 Ending Inventory Cost of Goods Sold LuddObUOTI badli Gross Profit /(Loss) Operating Expenses > Income before Income Taxes > Income Tax Expense Net Income / (Loss) LINK TO TEXT