The following information pertains to the inventory of Parvin Company for Year 3: Jan. 1 Beginning inventory Apr, 1 Oct. 1 Purchased Purchased 400 units $17 2,900 units $22 1,200 units $23 During Year 3, Parvin sold 3,825 units of inventory at $43 per unit and incurred $18,30% 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 $148,700, inventory of $6,800, common stock of $131,000, and retained earnings of $24,500. Required a. Prepare income statements using FIFO and LIFO. (Round intermediate calculations and final answers to the neares whole dollar amount.) PARVIN COMPANY Income Statements For the Year Ended December 31, Year 3 FIFO Sales 164,475 Cost of goods sold Gross margin Operating expenses Income before tax 0 0 Income tax expense Net income b. Determine the amount of income tax that Parvin would pay using each cost flow method. FIFO LIFO Income tax c. Determine the cash flow from operating activities under FIFO and LIFO. (Round intermediate calculations and final answers to the nearest whole dollar amount. Cash outflows should be indicated with minus sign.) FIFO LIFO Net cash flow from operating activities LIFO
The following information pertains to the inventory of Parvin Company for Year 3: Jan. 1 Beginning inventory Apr, 1 Oct. 1 Purchased Purchased 400 units $17 2,900 units $22 1,200 units $23 During Year 3, Parvin sold 3,825 units of inventory at $43 per unit and incurred $18,30% 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 $148,700, inventory of $6,800, common stock of $131,000, and retained earnings of $24,500. Required a. Prepare income statements using FIFO and LIFO. (Round intermediate calculations and final answers to the neares whole dollar amount.) PARVIN COMPANY Income Statements For the Year Ended December 31, Year 3 FIFO Sales 164,475 Cost of goods sold Gross margin Operating expenses Income before tax 0 0 Income tax expense Net income b. Determine the amount of income tax that Parvin would pay using each cost flow method. FIFO LIFO Income tax c. Determine the cash flow from operating activities under FIFO and LIFO. (Round intermediate calculations and final answers to the nearest whole dollar amount. Cash outflows should be indicated with minus sign.) FIFO LIFO Net cash flow from operating activities LIFO
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Required information
[The following information applies to the questions displayed below]
The following information pertains to the inventory of Parvin Company for Year 3:
Jan. 1 Beginning inventory
Apr, 1
Oct. 1
Purchased
Purchased
400 units # $17
2,900 units # $22
1,200 units # $23
During Year 3, Parvin sold 3,825 units of inventory at $43 per unit and incurred $18,30% 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 $148,700,
inventory of $6,800, common stock of $131,000, and retained earnings of $24,500.
Required
a. Prepare income statements using FIFO and LIFO. (Round intermediate calculations and final answers to the nearest
whole dollar amount.)
PARVIN COMPANY
Income Statements
For the Year Ended December 31, Year 3
FIFO
Sales
$
164,475
Cost of goods sold
Gross margin
Operating expenses
Income before tax
0
0
Income tax expense
Net income
b. Determine the amount of income tax that Parvin would pay using each cost flow method.
FIFO
LIFO
Income tax
c. Determine the cash flow from operating activities under FIFO and LIFO. (Round intermediate calculations and final
answers to the nearest whole dollar amount. Cash outflows should be indicated with minus sign.)
FIFO
LIFO
Net cash flow from operating activities
LIFO](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8eacdd83-66f5-4129-8b02-0ceea06fa5f5%2F675b274b-a7ea-416c-b2c8-51930bdc0f6f%2Fi0d1fpk_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below]
The following information pertains to the inventory of Parvin Company for Year 3:
Jan. 1 Beginning inventory
Apr, 1
Oct. 1
Purchased
Purchased
400 units # $17
2,900 units # $22
1,200 units # $23
During Year 3, Parvin sold 3,825 units of inventory at $43 per unit and incurred $18,30% 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 $148,700,
inventory of $6,800, common stock of $131,000, and retained earnings of $24,500.
Required
a. Prepare income statements using FIFO and LIFO. (Round intermediate calculations and final answers to the nearest
whole dollar amount.)
PARVIN COMPANY
Income Statements
For the Year Ended December 31, Year 3
FIFO
Sales
$
164,475
Cost of goods sold
Gross margin
Operating expenses
Income before tax
0
0
Income tax expense
Net income
b. Determine the amount of income tax that Parvin would pay using each cost flow method.
FIFO
LIFO
Income tax
c. Determine the cash flow from operating activities under FIFO and LIFO. (Round intermediate calculations and final
answers to the nearest whole dollar amount. Cash outflows should be indicated with minus sign.)
FIFO
LIFO
Net cash flow from operating activities
LIFO
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