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?
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text: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?
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