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: Unit Cost $13 Units Inventory, December 31, prior year For the current year: Purchase, April 11 Purchase, June 1 Sales ($56 each) Operating expenses (excluding income tax expense) 2,990 8,970 7,940 10,850 14 19 $192,500 E7-7 Part 2 2. Compute the difference between the pretax income and the ending inventory amount for the two cases. Comparison of Amounts Case A Case B FIFO LIFO Difference Pretax income 266,190 $ 223,500 $ 42,690 Ending inventory 8,758 2$ 9,516
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: Unit Cost $13 Units Inventory, December 31, prior year For the current year: Purchase, April 11 Purchase, June 1 Sales ($56 each) Operating expenses (excluding income tax expense) 2,990 8,970 7,940 10,850 14 19 $192,500 E7-7 Part 2 2. Compute the difference between the pretax income and the ending inventory amount for the two cases. Comparison of Amounts Case A Case B FIFO LIFO Difference Pretax income 266,190 $ 223,500 $ 42,690 Ending inventory 8,758 2$ 9,516
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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![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:
Unit
Units
Cost
Inventory, December 31, prior year
For the current year:
Purchase, April 11
Purchase, June 1
Sales ($56 each)
Operating expenses (excluding income tax expense)
2,990
$13
8,970
7,940
10,850
14
19
$192,500
E7-7 Part 2
2. Compute the difference between the pretax income and the ending inventory amount for the two cases.
Comparison of Amounts
Case A
Case B
FIFO
LIFO
Difference
Pretax income
$
266,190
$
223,500 $
42,690
Ending inventory
8,758
$
9,516 $](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc75d5a7b-ab63-418d-802a-b949799fef2b%2F49a77c37-515c-44b9-ada3-deff2f8617bc%2Fobnx65f_processed.png&w=3840&q=75)
Transcribed Image Text: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:
Unit
Units
Cost
Inventory, December 31, prior year
For the current year:
Purchase, April 11
Purchase, June 1
Sales ($56 each)
Operating expenses (excluding income tax expense)
2,990
$13
8,970
7,940
10,850
14
19
$192,500
E7-7 Part 2
2. Compute the difference between the pretax income and the ending inventory amount for the two cases.
Comparison of Amounts
Case A
Case B
FIFO
LIFO
Difference
Pretax income
$
266,190
$
223,500 $
42,690
Ending inventory
8,758
$
9,516 $
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