### Inventory and Income Analysis Scenario**Company Overview:**- **Company:** Pacific Company- **Products:** Electronic test equipment sourced from a foreign supplier.**Inventory Records:**- **Beginning Inventory:** - Units: 20 - Unit Cost: $11,520 - Total Cost: $230,400- **Purchases:** - Units: 38 - Unit Cost: $10,020 - Total Cost: $380,760- **Sales:** - 47 units sold at $24,630 each**Inventory Valuation:**- The company uses the LIFO (Last-In, First-Out) method for inventory valuation.### Discussion Questions**P7-4 Part 3****3a.** Analyze the change in pretax income as a result of the decision made on December 31 of the current year.**3b.** Evaluate potential income manipulation if the unit cost of test equipment continues to decline in the following year.**Method for Completion:**- Enter your answers in the provided table for each requirement: - For 3a, calculate and state the change in pretax income based on the decision. - For 3b, consider and discuss any indications of income manipulation due to expected cost changes.### Input Boxes:- **Req 3A and 3B**: Fill in the respective boxes with your analysis.End your analysis by clicking the "Req 3B" button to proceed.For a comprehensive understanding, reflect on how LIFO impacts financial outcomes and consider broader implications when prices change.

Name: ### Inventory and Income Analysis Scenario**Company Overview:**- **Co
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Description: ### Inventory and Income Analysis Scenario**Company Overview:**- **Company:** Pacific Company- **Products:** Electronic test equipment sourced from a foreign supplier.**Inventory Records:**- **Beginning Inventory:** - Units: 20 - Unit Cost: $11,52

LIFO Method -It is the method used for the valuation of inventory in which the last batch purchase…

Answered: Units 20 Unit Cost Total Cost Beginning…

Business

Accounting

Units 20 Unit Cost Total Cost Beginning inventory Purchases $11,520 10,020 $ 230,400 380,760 38 Sales (47 units at $24,630 each) Inventory is valued at cost using the LIFO inventory method.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Date Explanation Units Unit Cost Total Cost Sept. 1 Inventory 14 $102 $1,428 Sept. 12 Purchases 48 105 5,040 Sept. 19 Purchases 50 106 5,300 Sept. 26 Purchases 23 23 107 2,461 Totals 135 $14,229 (a) Compute the ending inventory at September 30 using the FIFO, LIFO and average-cost methods. (Round average cost per unit to 3 decimal places, e.g. 125.153 and final answers to O decimal places, e.g. 125.) The ending inventory at September 30 $ FIFO $ LIFO $ AVERAGE COST (b) Compute the cost of goods sold at September 30 using the FIFO, LIFO and average-cost methods. (Round average cost per unit to 3 decimal places, e.g. 125.153 and final answers to O decimal places, e.g. 125.) Cost of goods sold EA FIFO +A $ LIFO AVERAGE-COST $
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Question Content Area Periodic Inventory Using FIFO, LIFO, and Weighted Average Cost Methods The units of an item available for sale during the year were as follows: Jan. 1 Inventory 5 units at $35 $175 Aug. 7 Purchase 20 units at $36 720 Dec. 11 Purchase 11 units at $37 407 36 units $1,302 There are 18 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost using (a) the first-in, first-out (FIFO) method; (b) the last-in, first-out (LIFO) method; and (c) the weighted average cost method (round per unit cost to two decimal places and your final answer to the nearest whole dollar).