Jan. 1 Apr. 1 Oct. 1 Beginning inventory Purchased Purchased 500 units 2,800 units 1,100 units @ $25 $26 During the year, Parvin sold 3,740 units of inventory at $45 per unit and incurred $16,300 of operating expenses. Parvin currentl 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 $73,500, inventory of $10,000, common stock of $59,000, and retained earnings $24,500. 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. uming the cash flow from operating activities under FIFO and LIFO.
Jan. 1 Apr. 1 Oct. 1 Beginning inventory Purchased Purchased 500 units 2,800 units 1,100 units @ $25 $26 During the year, Parvin sold 3,740 units of inventory at $45 per unit and incurred $16,300 of operating expenses. Parvin currentl 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 $73,500, inventory of $10,000, common stock of $59,000, and retained earnings $24,500. 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. uming the cash flow from operating activities under FIFO and LIFO.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Jan. 1
Apr. 1
Oct. 1
Beginning inventory
Purchased
Purchased
500 units
2,800 units
1,100 units
$20
$25
$26
During the year, Parvin sold 3,740 units of inventory at $45 per unit and incurred $16,300 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 $73,500, inventory of $10,000, common stock of $59,000, and retained earnings
$24,500.
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.
. Determine the cash flow from operating activities under FIFO and LIFO.
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