16-59 LIFO, FIFO, and Cash Effects Study Appendix 16A. Kalitzki Implements Company had sales revenue of $710,000 in 20X2. Pertinent data for its only product in 20X2 included the following: Inventory, December 31, 20X1 15,000 units at $12 $180,000 February purchases 20,000 units at $14 280,000 August purchases 34,000 units at $16 544,000 Sales for the year 30,000 units 1. Prepare a statement of gross margin for 20X2. Use two columns, one assuming LIFO and one assuming FIFO. 2. Assume that Kalitzki is reporting to the tax authorities and has a 45% income tax rate. Suppose all transactions are for cash. Which inventory method results in more cash for Kalitzki? By how much?

16-59 LIFO, FIFO, and Cash Effects Study Appendix 16A. Kalitzki Implements Company had sales revenue of $710,000 in 20X2. Pertinent data for its only product in 20X2 included the following: Inventory, December 31, 20X1 15,000 units at $12 $180,000 February purchases 20,000 units at $14 280,000 August purchases 34,000 units at $16 544,000 Sales for the year 30,000 units 1. Prepare a statement of gross margin for 20X2. Use two columns, one assuming LIFO and one assuming FIFO. 2. Assume that Kalitzki is reporting to the tax authorities and has a 45% income tax rate. Suppose all transactions are for cash. Which inventory method results in more cash for Kalitzki? By how much?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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