Jan. 1 Apr. 1 Oct. 1 Beginning inventory Purchased Purchased 400 units $18 $23 2,500 units 1,000 units @ $24 @ @ uring the year, Parvin sold 3,315 units of inventory at $41 per unit and incurred $15,200 of operating expenses. Parvin currently uses he FIFO method but is considering a change to LIFO. All transactions are cash transactions. Assume a 30 percent income tax rate. arvin started the period with cash of $152,800, inventory of $7,200, common stock of $136,000, and retained earnings of $24,000. Cequired . Prepare income statements using FIFO and LIFO. . Determine the amount of income tax that Parvin would pay using each cost flow method. . Determine the cash flow from operating activities under FIFO and LIFO.
Jan. 1 Apr. 1 Oct. 1 Beginning inventory Purchased Purchased 400 units $18 $23 2,500 units 1,000 units @ $24 @ @ uring the year, Parvin sold 3,315 units of inventory at $41 per unit and incurred $15,200 of operating expenses. Parvin currently uses he FIFO method but is considering a change to LIFO. All transactions are cash transactions. Assume a 30 percent income tax rate. arvin started the period with cash of $152,800, inventory of $7,200, common stock of $136,000, and retained earnings of $24,000. Cequired . Prepare income statements using FIFO and LIFO. . Determine the amount of income tax that Parvin would pay using each cost flow method. . Determine the cash flow from operating activities under FIFO and LIFO.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please don't give handwritten answer...thanku
Transcribed Image Text:The following information pertains to the inventory of Parvin Company:
Jan. 1 Beginning inventory
Purchased
Purchased
Apr. 1
Oct. 1
400 units
2,500 units
1,000 units
@ $18
@ $23
@ $24
During the year, Parvin sold 3,315 units of inventory at $41 per unit and incurred $15,200 of operating expenses. Parvin currently uses
the FIFO method but is considering a change to LIFO. All transactions are cash transactions. Assume a 30 percent income tax rate.
Parvin started the period with cash of $152,800, inventory of $7,200, common stock of $136,000, and retained earnings of $24,000.
Required
a. Prepare income statements using FIFO and LIFO.
b. Determine the amount of income tax that Parvin would pay using each cost flow method.
c. Determine the cash flow from operating activities under FIFO and LIFO.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 4 steps with 5 images
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education