Question

Question 6 3.5 pt ABC Company employs a periodic inventory system and sells its inventory to customers for $23 per unit. ABC Company reported the following inventory information for the month of May: May 1 May 6 May 8 May 13 May 18 May 21 May 28 May 30 Beginning inventory 4,200 units @ $9 cost per unit Purchased 2,000 units @ $12 cost per unit Sold 3,000 units Purchased 4,000 units @ $8 cost per unit Sold 2,100 units Purchased 2,500 units @ $6 cost per unit Sold 2,200 units Purchased 2,300 units @ $17 cost per unit ABC Company reported operating expenses of $26,100 for May and they had a tax rate of 43%. Calculate the amount of net income shown on ABC Company's income statement for May using the LIFO method.

Answer 1

The records are updated at the end of the period under periodic system and not after each transaction

LIFO method states that goods purchased later will be sold first.

Units sold = 3000+2100+2200 = 7300 units

Income Statement

Sales Revenue = 7300*23 = $167,900

Less: cost of Goods sold 2300*17 + 2500*6+2500*8 = $74,100

Operating Expenses = $26,100

Income before tax = $67,700

Less: Tax = 67700*43% = $29,111

Net Income = $38,589

Hence, the answer is $38,589