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Givoly Incorporated 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: Inventory, December 31, prior year For the current year: Purchase, March 5 Purchase, September 19 Units 7,100 $ 401,000 19,100 10,100 8,100 16,100 Unit Cost $9 Sale ($29 each) Sale ($31 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: FIFO and (b) Case B: LIFO. 7 3 2. Compute the difference between the pretax income and the ending inventory amounts for the two cases. 3. Which inventory costing method may be preferred for income tax purposes?

Givoly Incorporated 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: Inventory, December 31, prior year For the current year: Purchase, March 5 Purchase, September 19 Units 7,100 $ 401,000 19,100 10,100 8,100 16,100 Unit Cost $9 Sale ($29 each) Sale ($31 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: FIFO and (b) Case B: LIFO. 7 3 2. Compute the difference between the pretax income and the ending inventory amounts for the two cases. 3. Which inventory costing method may be preferred for income tax purposes?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Givoly Incorporated 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: Inventory, December 31, prior year For the current year: Purchase, March 5 Purchase, September 19 Units 7,100 $ 401,000 19,100 10,100 8,100 16,100 Unit Cost $9 Sale ($29 each) Sale ($31 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: FIFO and (b) Case B: LIFO. 7 3 2. Compute the difference between the pretax income and the ending inventory amounts for the two cases. 3. Which inventory costing method may be preferred for income tax purposes?
Transcribed Image Text:Givoly Incorporated 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: Inventory, December 31, prior year For the current year: Purchase, March 5 Purchase, September 19 Units 7,100 $ 401,000 19,100 10,100 8,100 16,100 Unit Cost $9 Sale ($29 each) Sale ($31 each) Operating expenses (excluding income tax expense) Required: 1. Prepare a separate income statement through pretax income that details cost of goods sold for (a) Case A: FIFO and (b) Case B: LIFO. 7 3 2. Compute the difference between the pretax income and the ending inventory amounts for the two cases. 3. Which inventory costing method may be preferred for income tax purposes?
Complete this question by entering your answers in the tabs below. Required 1 Required 2 Sales revenue Cost of goods sold: Prepare a separate income statement through pretax income that details cost of goods sold for (a) Case A: FIFO and (b) Case B: LIFO. Note: Loss amounts should be indicated with a minus sign. Beginning inventory Purchases Goods available for sale Ending inventory Cost of goods sold Gross profit Operating expenses Pretax income/loss Required 3 Required 1 For the Year Ended December 31, current year Case A FIFO GIVOLY INCORPORATED Income Statement Required 2 ✔ ✔$ 63,900✔ 164,000✔ Case A FIFO 3 ›› Answer is not complete. ♥ 227,900 44,300 Required 3 S 734,000 550,400 401,000 149,400 < Required 1 Required 1 Required 2 Required 3 ♥ Comparison of Amounts Case B LIFO Case B LIFO $ 63,900✔ 164,000✔ 227,900 > Answer is not complete. Complete this question by entering your answers in the tabs below. 98,900✔ > Difference 734,000 Compute the difference between the pretax income and the ending inventory amounts for the two cases. Pretax income $ 149,400 S 204,000 S (54,600) Ending inventory $ 44,300 S 98,900 $ (54,600) ✔ < Required 1 805,000 401,000 204,000 Required 2 > Required 3 > > Answer is not complete. Complete this question by entering your answers in the tabs below. Which inventory costing method may be preferred for income tax purposes? Which inventory costing method may be preferred for income tax purposes? FIFO
Transcribed Image Text:Complete this question by entering your answers in the tabs below. Required 1 Required 2 Sales revenue Cost of goods sold: Prepare a separate income statement through pretax income that details cost of goods sold for (a) Case A: FIFO and (b) Case B: LIFO. Note: Loss amounts should be indicated with a minus sign. Beginning inventory Purchases Goods available for sale Ending inventory Cost of goods sold Gross profit Operating expenses Pretax income/loss Required 3 Required 1 For the Year Ended December 31, current year Case A FIFO GIVOLY INCORPORATED Income Statement Required 2 ✔ ✔$ 63,900✔ 164,000✔ Case A FIFO 3 ›› Answer is not complete. ♥ 227,900 44,300 Required 3 S 734,000 550,400 401,000 149,400 < Required 1 Required 1 Required 2 Required 3 ♥ Comparison of Amounts Case B LIFO Case B LIFO $ 63,900✔ 164,000✔ 227,900 > Answer is not complete. Complete this question by entering your answers in the tabs below. 98,900✔ > Difference 734,000 Compute the difference between the pretax income and the ending inventory amounts for the two cases. Pretax income $ 149,400 S 204,000 S (54,600) Ending inventory $ 44,300 S 98,900 $ (54,600) ✔ < Required 1 805,000 401,000 204,000 Required 2 > Required 3 > > Answer is not complete. Complete this question by entering your answers in the tabs below. Which inventory costing method may be preferred for income tax purposes? Which inventory costing method may be preferred for income tax purposes? FIFO
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