This window shows your responses and what was marked correct and incorrect from your previous attempt. O Required information E7-7 (Algo) Analyzing and Interpreting the Financial Statement Effects of LIFO and FIFO LO7-2, 7-3 [The following information applies to the questions displayed below.) Emily Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 2: Unita 2,980 Unit Cost $14 Inventory, December 31, prior year Yor the current year Purchase, April 11 Purchase, June 1 Sales (558 each) Operating expenses (excluding income tax expense) 8,910 7,840 10,910 15 20 $194,500 E7-7 Part 1 Required: 1. Prepare a separate income statement through pretax income that details cost of goods sold for (a) Case A: FIFO and (b) Case B: LIFO. EMILY COMPANY WAN Required information EMILY COMPANY Income Statement For the Year Ended December 31, current year Case A Case B FIFO LIFO Sales revenue $ 632,780 $ 632,780 Cost of goods sold: Beginning inventory IS 41,720 41,720 Purchases 133,650 133,650 Purchases 156,800 156,800 Goods available for sale 332,170 332,170 Ending inventory 172,850 130,679 0 0 Cost of goods sold 159,320 201.491 Gross profit 473,460 431,289 Operating expenses 194,500 194,500 0 0 Pretax income $ 278,960 x $ 236,789 "Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted. product 2: Units Ur $ 2,980 Inventory, December 31, prior year For the current year: Purchase, April 11 Purchase, June 1 Sales ($58 each) Operating expenses (excluding income tax expense) 8,910 7,840 10,910 $194,500 E7-7 Part 2 2. Compute the difference between the pretax income and the ending inventory amount for the two Comparison of Amounts Case A Case B FIFO LIFO Difference $ 278,960 $ 236,789 $ 42,171 $ 172,850 $ 130,679 $ 42,171 % Pretax income Ending inventory