Emily Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of th accounting records provided the following information for product 2: Inventory, December 31, prior year For the current year: Purchase, April 11 Purchase, June 1 Sales ($53 each) Operating expenses (excluding income tax expense) $191,000 Units Unit Cost $10 2,850 8,990 7,860 10,930 11 16 Required: 1. Prepare a separate income statement through pretax income that details cost of goods sold for (a) Case A: FI LIFO. 2. Compute the difference between the pretax income and the ending inventory amount for the two cases. 3. Which inventory costing method may be preferred for income tax purposes?
Emily Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of th accounting records provided the following information for product 2: Inventory, December 31, prior year For the current year: Purchase, April 11 Purchase, June 1 Sales ($53 each) Operating expenses (excluding income tax expense) $191,000 Units Unit Cost $10 2,850 8,990 7,860 10,930 11 16 Required: 1. Prepare a separate income statement through pretax income that details cost of goods sold for (a) Case A: FI LIFO. 2. Compute the difference between the pretax income and the ending inventory amount for the two cases. 3. Which inventory costing method may be preferred for income tax purposes?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Emily Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of th
accounting records provided the following information for product 2:
Inventory, December 31, prior year
For the current year:
Purchase, April 11
Purchase, June 1
Units
2,850
$191,000
Required 1 Required 2
8,900
7,860
10,930
Sales ($53 each)
Operating expenses (excluding income tax expense)
Required:
1. Prepare a separate income statement through pretax income that details cost of goods sold for (a) Case A: FIR
LIFO.
Required 3
Complete this question by entering your answers in the tabs below.
Unit Cost
$ 10
2. Compute the difference between the pretax income and the ending inventory amount for the two cases.
3. Which inventory costing method may be preferred for income tax purposes?
11
16
Prepare a separate income statement through pretax income that details cost of goods sold for (a) Ca
FIFO and (b) Case B: LIFO.
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