Question

Required information [The following information applies to the questions displayed below.) Emily Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 2: Units 2,830 Unit Cost $11 Inventory, December 31, prior year For the current year: Purchase, April 11 Purchase, June 1 Sales ($56 each) Operating expenses (excluding income tax expense) 8, 940 7,870 10,980 $ 192,000 Required: 1. Prepare a separate income statement through pretax income that details cost of goods sold for (a) Case A: FIFO and (b) Case B: LIFO. EMILY COMPANY Income Statement For the Year Ended December 31, current year Case A FIFO $ 614,880 Case B LIFO $ 614,880 Sales revenue Cost of goods sold: Beginning inventory Purchases $ 31,130 $ 31,130 31,130 31,130 Goods available for sale Ending inventory Cost of goods sold Gross profit Operating expenses 192,000 192,000 Pretax income

Answer 1

Income statement

	FIFO		LIFO
Sales revenue		614880		614880
Cost of goods sold
Beginning inventory	31130		31130
Purchase 1	107280		107280
Purchase 2	133790		133790
Cost of goods available for sale	272200		272200
Less: Ending inventory	-143270		-101090
Cost of goods sold		128930		171110
Gross profit		485950		443770
Operating expense		192000		192000
Operating income		293950		251770