Question

Problem 6-04A a

The management of Metlock, Inc. asks your help in determining the comparative effects of the FIFO and LIFO inventory cost flow methods. For 2022, the accounting records show these data.

Inventory, January 1 (14,500 units)		$ 58,000
Cost of 125,000 units purchased		550,600
Selling price of 98,000 units sold		750,000
Operating expenses		128,000

Units purchased consisted of 36,000 units at $4.20 on May 10; 63,000 units at $4.40 on August 15; and 26,000 units at $4.70 on November 20. Income taxes are 28%.

(a) Prepare comparative condensed income statements for 2022 under FIFO and LIFO. (Round answers to 0 decimal places, e.g. 5,125.)

Metlock, Inc. Condensed Income Statements choose the accounting period December 31, 2022For the Quarter Ended December 31, 2022For the Year Ended December 31, 2022
	FIFO		LIFO
select an income statement item Beginning InventoryCost of Goods Available for SaleCost of Goods PurchasedCost of Goods SoldDividendsEnding InventoryGross ProfitIncome before Income TaxesIncome Tax ExpenseNet Income / (Loss)Operating ExpensesRetained Earnings, January 1Retained Earnings, December 31RevenuesSalesTotal Revenues	$enter a dollar amount		$enter a dollar amount
select an opening name for section one Beginning InventoryCost of Goods Available for SaleCost of Goods PurchasedCost of Goods SoldDividendsEnding InventoryGross ProfitIncome before Income TaxesIncome Tax ExpenseNet Income / (Loss)Operating ExpensesRetained Earnings, January 1Retained Earnings, December 31RevenuesSalesTotal Revenues
select an income statement item     Beginning Inventory    Cost of Goods Available for Sale    Cost of Goods Purchased    Cost of Goods Sold    Dividends    Ending Inventory    Gross Profit    Income before Income Taxes    Income Tax Expense    Net Income / (Loss)    Operating Expenses    Retained Earnings, January 1    Retained Earnings, December 31    Revenues    Sales    Total Revenues	enter a dollar amount		enter a dollar amount
select an income statement item     Beginning Inventory    Cost of Goods Available for Sale    Cost of Goods Purchased    Cost of Goods Sold    Dividends    Ending Inventory    Gross Profit    Income before Income Taxes    Income Tax Expense    Net Income / (Loss)    Operating Expenses    Retained Earnings, January 1    Retained Earnings, December 31    Revenues    Sales    Total Revenues	enter a dollar amount		enter a dollar amount
select a closing name for subsection one     Beginning Inventory    Cost of Goods Available for Sale    Cost of Goods Purchased    Cost of Goods Sold    Dividends    Ending Inventory    Gross Profit    Income before Income Taxes    Income Tax Expense    Net Income / (Loss)    Operating Expenses    Retained Earnings, January 1    Retained Earnings, December 31    Revenues    Sales    Total Revenues	enter a subtotal of the two previous amounts		enter a subtotal of the two previous amounts
select between addition and deduction     Add    Less     : select an income statement item Beginning InventoryCost of Goods Available for SaleCost of Goods PurchasedCost of Goods SoldDividendsEnding InventoryGross ProfitIncome before Income TaxesIncome Tax ExpenseNet Income / (Loss)Operating ExpensesRetained Earnings, January 1Retained Earnings, December 31RevenuesSalesTotal Revenues	enter a dollar amount		enter a dollar amount
select a closing name for section one     Beginning Inventory    Cost of Goods Available for Sale    Cost of Goods Purchased    Cost of Goods Sold    Dividends    Ending Inventory    Gross Profit    Income before Income Taxes    Income Tax Expense    Net Income / (Loss)    Operating Expenses    Retained Earnings, January 1    Retained Earnings, December 31    Revenues    Sales    Total Revenues	enter a total amount for section one		enter a total amount for section one
select a summarizing line for the first part Beginning InventoryCost of Goods Available for SaleCost of Goods PurchasedCost of Goods SoldDividendsEnding InventoryGross ProfitIncome before Income TaxesIncome Tax ExpenseNet Income / (Loss)Operating ExpensesRetained Earnings, January 1Retained Earnings, December 31RevenuesSalesTotal Revenues	enter a total amount for the first part		enter a total amount for the first part
select an income statement item Beginning InventoryCost of Goods Available for SaleCost of Goods PurchasedCost of Goods SoldDividendsEnding InventoryGross ProfitIncome before Income TaxesIncome Tax ExpenseNet Income / (Loss)Operating ExpensesRetained Earnings, January 1Retained Earnings, December 31RevenuesSalesTotal Revenues	enter a dollar amount		enter a dollar amount
select a summarizing line for the second part Beginning InventoryCost of Goods Available for SaleCost of Goods PurchasedCost of Goods SoldDividendsEnding InventoryGross ProfitIncome before Income TaxesIncome Tax ExpenseNet Income / (Loss)Operating ExpensesRetained Earnings, January 1Retained Earnings, December 31RevenuesSalesTotal Revenues	enter a total amount for two parts		enter a total amount for two parts
enter an income statement item Beginning InventoryCost of Goods Available for SaleCost of Goods PurchasedCost of Goods SoldDividendsEnding InventoryGross ProfitIncome before Income TaxesIncome Tax ExpenseNet Income / (Loss)Operating ExpensesRetained Earnings, January 1Retained Earnings, December 31RevenuesSalesTotal Revenues	enter a dollar amount		enter a dollar amount
select a closing name for this statement Beginning InventoryCost of Goods Available for SaleCost of Goods PurchasedCost of Goods SoldDividendsEnding InventoryGross ProfitIncome before Income TaxesIncome Tax ExpenseNet Income / (Loss)Operating ExpensesRetained Earnings, January 1Retained Earnings, December 31RevenuesSalesTotal Revenues	$enter a total net income or loss amount		$enter a total net income or loss amount

Answer 1

Condensed Income Statements
For the Year Ended December 31, 2022
	FIFO	LIFO
Sales	750000	750000
Cost of Goods Sold
Beginning Inventory	58000	58000
Cost of Goods Purchased	550600	550600
Cost of Goods Available for Sale	608600	608600
Less: Ending Inventory	190400	171400
Cost of Goods Sold	418200	437200
Gross Profit	331800	312800
Operating Expenses	128000	128000
Income before Income Taxes	203800	184800
Income Tax Expense	57064	51744
Net Income / (Loss)	146736	133056
Workings:
Ending Inventory units	41500	=14500+125000-98000
Ending Inventory:
FIFO	190400	=(26000*4.7)+(41500-26000)*4.4
LIFO	171400	=58000+(41500-14500)*4.2