Required information Exercise 5-6A (Static) 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 400 units @ $30 2,000 units @ $35 600 units @ $38 During Year 2, Parvin sold 2,700 units of inventory at $90 per unit and incurred $41,500 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 $75,000, inventory of $12,000, common stock of $50,000, and retained earnings of $37,000. Exercise 5-6A (Static) Part d d. Determine the cash flow from operating activities under FIFO and LIFO. (Amounts to be deducted should be indicated with m sign.)
Required information Exercise 5-6A (Static) 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 400 units @ $30 2,000 units @ $35 600 units @ $38 During Year 2, Parvin sold 2,700 units of inventory at $90 per unit and incurred $41,500 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 $75,000, inventory of $12,000, common stock of $50,000, and retained earnings of $37,000. Exercise 5-6A (Static) Part d d. Determine the cash flow from operating activities under FIFO and LIFO. (Amounts to be deducted should be indicated with m sign.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Vikram
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![entory Flow Assumption
3
Required information
Exercise 5-6A (Static) 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
Saved
During Year 2, Parvin sold 2,700 units of inventory at $90 per unit and incurred $41,500 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 $75,000, inventory of $12,000, common stock of $50,000,
and retained earnings of $37,000.
PARVIN Company
Cash Flows from Operating Activities
FIFO
400 units @ $30
2,000 units @ $35
600 units @ $38
Exercise 5-6A (Static) Part d
d. Determine the cash flow from operating activities under FIFO and LIFO. (Amounts to be deducted should be indicated with mir
sign.)
Cash flows from operating activities:
Cash inflow from customers
Cash outflow for inventory
Cash outflow for operating expenses
Cash outflow for income tax expense
Net cash flow from operating activities
LIFO](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe407a423-3f41-421e-803d-cf16050a22fd%2Fc86ff783-754c-4be0-87fc-1a6d54945582%2Fpt22qf5_processed.jpeg&w=3840&q=75)
Transcribed Image Text:entory Flow Assumption
3
Required information
Exercise 5-6A (Static) 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
Saved
During Year 2, Parvin sold 2,700 units of inventory at $90 per unit and incurred $41,500 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 $75,000, inventory of $12,000, common stock of $50,000,
and retained earnings of $37,000.
PARVIN Company
Cash Flows from Operating Activities
FIFO
400 units @ $30
2,000 units @ $35
600 units @ $38
Exercise 5-6A (Static) Part d
d. Determine the cash flow from operating activities under FIFO and LIFO. (Amounts to be deducted should be indicated with mir
sign.)
Cash flows from operating activities:
Cash inflow from customers
Cash outflow for inventory
Cash outflow for operating expenses
Cash outflow for income tax expense
Net cash flow from operating activities
LIFO
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