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Problem: Module 2 Textbook Problem 11 Learning Objective: 2-7 Show how different inventory cost flow methods (specific identification, FIFO, LIFO, and weighted average) affect financial statements The following information pertains to the inventory of Parvin Company: Jan. 1 Beginning inventory Purchased Purchased Apr. 1 Oct. 1 During the year, Parvin sold 3,315 units of inventory at $41 per unit and incurred $16,000 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 $109,200, inventory of $6,800, common stock of $92,000, 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. Required A Complete this question by entering your answers in the tabs below. Required B PARVIN COMPANY Income Statements For the Year Ended December 31 FIFO Sales Cost of goods sold Gross margin Prepare income statements using FIFO and LIFO. (Round intermediate calculations and final answers to the nearest whole dollar amount.) Operating expenses Income before tax Net income Required C ✓ ✓ ✔ ✓ 16,000 (16,000) ✔ 400 units 2,400 units @$17 @ $22 1,100 units @ $23 135,915 $ LIFO Answer is not complete. 135,915 16,000 (16,000) < Required A Required B >

Problem: Module 2 Textbook Problem 11 Learning Objective: 2-7 Show how different inventory cost flow methods (specific identification, FIFO, LIFO, and weighted average) affect financial statements The following information pertains to the inventory of Parvin Company: Jan. 1 Beginning inventory Purchased Purchased Apr. 1 Oct. 1 During the year, Parvin sold 3,315 units of inventory at $41 per unit and incurred $16,000 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 $109,200, inventory of $6,800, common stock of $92,000, 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. Required A Complete this question by entering your answers in the tabs below. Required B PARVIN COMPANY Income Statements For the Year Ended December 31 FIFO Sales Cost of goods sold Gross margin Prepare income statements using FIFO and LIFO. (Round intermediate calculations and final answers to the nearest whole dollar amount.) Operating expenses Income before tax Net income Required C ✓ ✓ ✔ ✓ 16,000 (16,000) ✔ 400 units 2,400 units @$17 @ $22 1,100 units @ $23 135,915 $ LIFO Answer is not complete. 135,915 16,000 (16,000) < Required A Required B >

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter6: Cost Of Goods Sold And Inventory
Section: Chapter Questions
Problem 62E
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Problem: Module 2 Textbook Problem 11 Learning Objective: 2-7 Show how different inventory cost flow methods (specific identification, FIFO, LIFO, and weighted average) affect financial statements The following information pertains to the inventory of Parvin Company: Jan. 1 Beginning inventory Purchased Purchased Apr. 1 Oct. 1 During the year, Parvin sold 3,315 units of inventory at $41 per unit and incurred $16,000 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 $109,200, inventory of $6,800, common stock of $92,000, and retained earnings of $24,000. Required A Required B 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. Complete this question by entering your answers in the tabs below. PARVIN COMPANY Income Statements For the Year Ended December 31 FIFO $ 135,915 Sales Cost of goods sold Gross margin Operating expenses Income before tax Required C Net income 400 units 2,400 units 1,100 units @ Prepare income statements using FIFO and LIFO. (Round intermediate calculations and final answers to the nearest whole dollar amount.) ✓ ✓ ✓ 16,000 (16,000) ✓ $ @ @ LIFO 135,915 $17 $22 $23 Answer is not complete. 16,000✔ (16,000) < Required A Required B >
Transcribed Image Text:Problem: Module 2 Textbook Problem 11 Learning Objective: 2-7 Show how different inventory cost flow methods (specific identification, FIFO, LIFO, and weighted average) affect financial statements The following information pertains to the inventory of Parvin Company: Jan. 1 Beginning inventory Purchased Purchased Apr. 1 Oct. 1 During the year, Parvin sold 3,315 units of inventory at $41 per unit and incurred $16,000 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 $109,200, inventory of $6,800, common stock of $92,000, and retained earnings of $24,000. Required A Required B 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. Complete this question by entering your answers in the tabs below. PARVIN COMPANY Income Statements For the Year Ended December 31 FIFO $ 135,915 Sales Cost of goods sold Gross margin Operating expenses Income before tax Required C Net income 400 units 2,400 units 1,100 units @ Prepare income statements using FIFO and LIFO. (Round intermediate calculations and final answers to the nearest whole dollar amount.) ✓ ✓ ✓ 16,000 (16,000) ✓ $ @ @ LIFO 135,915 $17 $22 $23 Answer is not complete. 16,000✔ (16,000) < Required A Required B >
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