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 500 units @ $33 2,850 units @ $38 700 units @ $41 January 1 April 1 October 1 During Year 2, Parvin sold 3,800 units of inventory at $100 per unit and incurred $50,500 of operating expenses. Parvin currently uses the FIFO method but is considering a change to LIFO. All transactions are cash transactions. Assume a 40 percent income tax rate. Parvin started the period with cash of $93,000, inventory of $16,500, common stock of $68,000, and retained earnings of $41,500. Exercise 5-6A (Algo) Part c c. Determine the amount of income tax that Parvin would pay using each cost flow method. Income tax paid using FIFO Income tax paid using LIFO

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 500 units @ $33 2,850 units @ $38 700 units @ $41 January 1 April 1 October 1 During Year 2, Parvin sold 3,800 units of inventory at $100 per unit and incurred $50,500 of operating expenses. Parvin currently uses the FIFO method but is considering a change to LIFO. All transactions are cash transactions. Assume a 40 percent income tax rate. Parvin started the period with cash of $93,000, inventory of $16,500, common stock of $68,000, and retained earnings of $41,500. Exercise 5-6A (Algo) Part c c. Determine the amount of income tax that Parvin would pay using each cost flow method. Income tax paid using FIFO Income tax paid using LIFO

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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