Taylor Corporation has used a periodic inventory system and the LIFO cost method since its inception in 2011. The company began 2018 with the following inventory layers (listed in chronological order of acquisition): 14,500 units @ $15 $ 217,500 19,500 units @ $20 390,000 Beginning inventory $ 607,500 During 2018, 39,000 units were purchased for $25 per unit. Due to unexpected demand for the company's product, 2018 sales totaled 48,000 units at various prices, leaving 25,000 units in ending inventory. Compute:1. Compute cost of goods sold for 2018.2. Compute the amount of LIFO liquidation profit that the company must report in a disclosure note to its 2018 financial statements. Assume an income tax rate of 40%.3. If the company decided to purchase an additional 9,000 units at $25 per unit at the end of the year, how much income tax currently payable would be saved?
Taylor Corporation has used a periodic inventory system and the LIFO cost method since its inception in 2011. The company began 2018 with the following inventory layers (listed in chronological order of acquisition):
| 14,500 units @ $15 | $ | 217,500 | |
| 19,500 units @ $20 | 390,000 | ||
| Beginning inventory | $ | 607,500 |
During 2018, 39,000 units were purchased for $25 per unit. Due to unexpected demand for the company's product, 2018 sales totaled 48,000 units at various prices, leaving 25,000 units in ending inventory.
Compute:
1. Compute cost of goods sold for 2018.
2. Compute the amount of LIFO liquidation profit that the company must report in a disclosure note to its 2018 financial statements. Assume an income tax rate of 40%.
3. If the company decided to purchase an additional 9,000 units at $25 per unit at the end of the year, how much income tax currently payable would be saved?
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