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Required information Exercise 5-6A (Algo) Income tax effect of shifting from FIFO to LIFO LO 5-1 [The following information applies to the questions displayed below.] The following information pertains to the inventory of Parvin Company during Year 2. January 1 April 1 October 1 Beginning Inventory Purchased Purchased 650 units @ $40 2,500 units @ $45 850 units $48 During Year 2, Parvin sold 3,500 units of inventory at $80 per unit and incurred $44,000 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 $80,000, inventory of $26,000, common stock of $55,000, and retained earnings of $51,000.

Required information Exercise 5-6A (Algo) Income tax effect of shifting from FIFO to LIFO LO 5-1 [The following information applies to the questions displayed below.] The following information pertains to the inventory of Parvin Company during Year 2. January 1 April 1 October 1 Beginning Inventory Purchased Purchased 650 units @ $40 2,500 units @ $45 850 units $48 During Year 2, Parvin sold 3,500 units of inventory at $80 per unit and incurred $44,000 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 $80,000, inventory of $26,000, common stock of $55,000, and retained earnings of $51,000.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Required information Exercise 5-6A (Algo) Income tax effect of shifting from FIFO to LIFO LO 5-1 [The following information applies to the questions displayed below.] The following information pertains to the inventory of Parvin Company during Year 2. Beginning Inventory Purchased Purchased January 11 April 1 October 1 650 units @ $40 2,500 units @ $45 850 units @ $48 During Year 2, Parvin sold 3,500 units of inventory at $80 per unit and incurred $44,000 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 $80,000, inventory of $26,000, common stock of $55,000. and retained earnings of $51,000.
Transcribed Image Text:Required information Exercise 5-6A (Algo) Income tax effect of shifting from FIFO to LIFO LO 5-1 [The following information applies to the questions displayed below.] The following information pertains to the inventory of Parvin Company during Year 2. Beginning Inventory Purchased Purchased January 11 April 1 October 1 650 units @ $40 2,500 units @ $45 850 units @ $48 During Year 2, Parvin sold 3,500 units of inventory at $80 per unit and incurred $44,000 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 $80,000, inventory of $26,000, common stock of $55,000. and retained earnings of $51,000.
int April 1 October 1 ences Exercise 5-6A (Algo) Part b During Year 2, Parvin sold 3,500 units of inventory at $80 per unit and incurred $44,000 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 $80,000, inventory of $26,000, common stock of $55,000, and retained earnings of $51,000. b. Prepare income statements using FIFO and LIFO. FIFO Complete this question by entering your answers in the tabs below. Purchased Purchased Prepare income statements using FIFO. Cash Cost of goods sold LIFO PARVIN COMPANY Income Statements For the Year Ended December 31, Year 2 FIFO FIFO Cash Cost of goods sold: Prepare income statements using FIFO. PARVIN COMPANY Income Statements For the Year Ended December 31, Year 2 Cost of goods sold LIFO LIFO Cost of goods sold: Prepare income statements using LIFO. PARVIN COMPANY Income Statements For the Year Ended December 31, Year 2 Cost of goods sold 2,500 units $45 850 units $48 S <FIFO S WHO 0 0 0 0 0 0 LIFO LIFO >
Transcribed Image Text:int April 1 October 1 ences Exercise 5-6A (Algo) Part b During Year 2, Parvin sold 3,500 units of inventory at $80 per unit and incurred $44,000 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 $80,000, inventory of $26,000, common stock of $55,000, and retained earnings of $51,000. b. Prepare income statements using FIFO and LIFO. FIFO Complete this question by entering your answers in the tabs below. Purchased Purchased Prepare income statements using FIFO. Cash Cost of goods sold LIFO PARVIN COMPANY Income Statements For the Year Ended December 31, Year 2 FIFO FIFO Cash Cost of goods sold: Prepare income statements using FIFO. PARVIN COMPANY Income Statements For the Year Ended December 31, Year 2 Cost of goods sold LIFO LIFO Cost of goods sold: Prepare income statements using LIFO. PARVIN COMPANY Income Statements For the Year Ended December 31, Year 2 Cost of goods sold 2,500 units $45 850 units $48 S <FIFO S WHO 0 0 0 0 0 0 LIFO LIFO >
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