The following information pertains to the inventory of Parvin Company: Jan. 1 Beginning inventory Apr. 1 Oct. 1 Purchased Purchased During the year, Parvin sold 3,400 units of inventory at $43 per unit and incurred $15,900 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 $148,800, inventory of $5,700, common stock of $130,000, and retained earnings of $24,500. Required a. Prepare income statements using FIFO and LIFO. b. Determine the amount of income tax that Parvin would pay using each cost flow method. c. Determine the cash flow from operating activities under FIFO and LIFO. 300 units 8 $19 2,900 units e $24 800 units e $25 Complete this question by entering your answers in the tabs below. Required A Required B Required C Determine the amount of income tax that Parvin would pay using each cost flow method. FIFO LIFO
The following information pertains to the inventory of Parvin Company: Jan. 1 Beginning inventory Apr. 1 Oct. 1 Purchased Purchased During the year, Parvin sold 3,400 units of inventory at $43 per unit and incurred $15,900 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 $148,800, inventory of $5,700, common stock of $130,000, and retained earnings of $24,500. Required a. Prepare income statements using FIFO and LIFO. b. Determine the amount of income tax that Parvin would pay using each cost flow method. c. Determine the cash flow from operating activities under FIFO and LIFO. 300 units 8 $19 2,900 units e $24 800 units e $25 Complete this question by entering your answers in the tabs below. Required A Required B Required C Determine the amount of income tax that Parvin would pay using each cost flow method. FIFO LIFO
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The following information pertains to the inventory of Parvin Company:
Jan. 1 Beginning inventory
Purchased
Purchased
Apr. 1
Oct. 1
During the year, Parvin sold 3,400 units of inventory at $43 per unit and incurred $15,900 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 $148,800, inventory of $5,700, common stock of $130,000, and retained earnings of $24,500.
Required
a. Prepare income statements using FIFO and LIFO.
b. Determine the amount of income tax that Parvin would pay using each cost flow method.
c. Determine the cash flow from operating activities under FIFO and LIFO.
Complete this question by entering your answers in the tabs below.
Required A Required B
Determine the amount of income tax that Parvin would pay using each cost flow method.
Income tax
300 units e $19
2,900 units e $24
800 units @ $25
FIFO
Required C
LIFO
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