The management of Carla Vista Inc. asks your help in determining the comparative effects of the FIFO and LIFO inventory cost flow methods. For 2025, the accounting records show these data. They use the periodic inventory system. Inventory, January 1 (14,500 units) Cost of 123,000 units purchased Selling price of 95,000 units sold Operating expenses Units purchased consisted of 35,000 units at $3.20 on May 10, 63,000 units at $3.40 on August 15, and 25,000 units at $3.70 on November 20. Income taxes are 26%. (a) Prepare comparative condensed income statements for 2025 under FIFO and LIFO. Sales Revenue Cost of Goods Sold Beginning inventory Cost of Goods Purchased Cost of Goods Available for Sale Less Ending Inventory Cost of Goods Sold Gross Profit/(Loss) Operating Expenses Income before income Taxes Income Tax Expense $43,500 418,700 727,000 123,000 Net Income/(Loss) Carla Vista Inc. Condensed Income Statements For the Year Ended December 31, 2025 FIFO 727,000 43.500 418.700 462,200 306.700 155500 571500 123000 448,500 116.610 331890 $ $ LIFO 727,000 43,500 418,700 462.200 155.500 306700 420300 123000 297300 77298 220002

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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The management of Carla Vista Inc. asks your help in determining the comparative effects of the FIFO and LIFO inventory cost flow
methods. For 2025, the accounting records show these data. They use the periodic inventory system.
Inventory, January 1 (14,500 units)
Cost of 123,000 units purchased
Selling price of 95,000 units sold
Operating expenses
Units purchased consisted of 35,000 units at $3.20 on May 10, 63,000 units at $3.40 on August 15, and 25,000 units at $3.70 on
November 20. Income taxes are 26%.
(a) Prepare comparative condensed income statements for 2025 under FIFO and LIFO.
Sales Revenue
Cost of Goods Sold
Beginning Inventory
Cost of Goods Purchased
Cost of Goods Available for Sale
Less :
Ending Inventory
Cost of Goods Sold
Gross Profit/(Loss)
Operating Expenses
Income before Income Taxes
Income Tax Expense
$43,500
418,700
727,000
123,000
Net Income /(Loss)
Carla Vista Inc.
Condensed Income Statements
For the Year Ended December 31, 2025
$
FIFO
727,000
43.500
418.700
462 200
306,700
155500
571500
123000
448,500
116,610
331890
S
LIFO
727,000
43,500
418,700
462,200
155,500
306700
1010
420300
123000
297300
77298
220002
Transcribed Image Text:The management of Carla Vista Inc. asks your help in determining the comparative effects of the FIFO and LIFO inventory cost flow methods. For 2025, the accounting records show these data. They use the periodic inventory system. Inventory, January 1 (14,500 units) Cost of 123,000 units purchased Selling price of 95,000 units sold Operating expenses Units purchased consisted of 35,000 units at $3.20 on May 10, 63,000 units at $3.40 on August 15, and 25,000 units at $3.70 on November 20. Income taxes are 26%. (a) Prepare comparative condensed income statements for 2025 under FIFO and LIFO. Sales Revenue Cost of Goods Sold Beginning Inventory Cost of Goods Purchased Cost of Goods Available for Sale Less : Ending Inventory Cost of Goods Sold Gross Profit/(Loss) Operating Expenses Income before Income Taxes Income Tax Expense $43,500 418,700 727,000 123,000 Net Income /(Loss) Carla Vista Inc. Condensed Income Statements For the Year Ended December 31, 2025 $ FIFO 727,000 43.500 418.700 462 200 306,700 155500 571500 123000 448,500 116,610 331890 S LIFO 727,000 43,500 418,700 462,200 155,500 306700 1010 420300 123000 297300 77298 220002
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