Question

Please show the calculation! Thank you.

Required information [The following information applies to the questions displayed below.] The following information pertains to the inventory of Parvin Company: Jan. 1 Apr. 1 Oct. 1 Beginning inventory Purchased Purchased 300 units 2,600 units 1,100 units @ @ @ $15 $20 $21 During 2018, Parvin sold 3,400 units of inventory at $43 per unit and incurred $16,300 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 $191,500, inventory of $4,500, common stock of $172,000, and retained earnings of $24,000. -. Determine the cash flow from operating activities under FIFO and LIFO. (Round intermediate calculations and final answers to the nearest whole dollar amount. Amounts to be deducted should be indicated with minus sign.) FIFO LIFO Net cash flow from operating activities

Answer 1

Solution As per Below Images:

Requirement 1 Statement showing cash flow from operating activities Under FIFO and LIFO Particulars Amount in $ FIFO LIFO 146200 146200 (75100) (16300) (75100) (16300) Cash Sales ( 3400 X 43 ) Less: Cash Purchase Operating Expenses Increase in Inventory FIFO ( 12600 - 4500) LIFO ( 10500 - 4500) Cash Flow From Operating Activity Opening Balance Net Cash flow From Operation (8100) 46700 191500 238200 (6000) 48800 191500 240300 Requirement 2 & 3 Parvin Company Income Statements For the Year Ended December 31, 2018 Particulars Amount in $ FIFO LIFO 146200 146200 67000 Sales ( 3400 X 43 ) Cost of Goods Sold FIFO (4500+75100-12600) LIFO ( 4500+75100-10500) Gross Margin Operating Expenses Income Before Tax Income Tax @ 30% Net Income 79200 16300 62900 18870 44030 69100 77100 16300 60800 18240 42560 Statement Showing Income Tax payable by Parvin Company Particulars Income Before Tax Income Tax rate Tax Payable Amount in $ FIFO LIFO 62900 6 0800 30% 30% 18870 18240 Scanned with CamScanner

Working Notes 1) Statement Showing Valuation of Inventory as per FIFO Date Purchase Rate Sale Rate Quantity Value Quantity | Value Amount in $ Closing Balance Quantity Rate Value 300 15 4500 300 15 4500 Opening Balance Quantity Rate Value 300 15 4500 Total 1-Jan-18 300 15 4500 1-Apr-18 1 1-Apr-18 2600 52000 . . 1-Oct-18) 1-Oct-18 1-Oct-18 . 21 21 . 23100T . . Total 300 154500 2600 20 52000 - Total Sale Sale Sale Closing Stock 1100 300 15 2600 20 . . 2900 1.I - 1300T 15 . . 2600 20 T . . 1100 2 1 4000 15 (4500) (300) 15 20 52000) (2600) 21 (10500) (500) 21 600 21 4500 52000 56500 4500 52000 23100 79600 (4500) (300) (2600) (500) (10500) 12600 31-Dec-18 2) Statement Showing Valuation of Inventory as per LIFO Date Sale Rate Purchase Rate . Value Quantity Opening Balance Quantity Rate Value 300 15 4500 Total Value Quantity - - Amount in $ Closing Balance Quantity Rate Value 300 15 4500 300 15 4500 1-Jan-18 300 2600 15 20 2600 20 520 52000 2900 300 15 20 1-Apr-18 300154500 1-Apr-18 Total 1-Oct-18 300 154500 1-Oct-18 2600 20 52000 1-Oct-18 - - - - Total Sale Sale | 31-Dec-18 Closing Stock CamScanne 11002123100 4500 52000 56500 4500 52000 23100 79600 (23100) (46000) 10500 2600 1100 4000 (1100) (2300) 600 21 -- (1100) (2300) 21 20 (23100) (46000) 21 20