Question

Question 5 View Policies Current Attempt in Progress The management of Kingbird, 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) $ 43,500 Cost of 117,000 units purchased 398,000 Selling price of 102,000 units sold 780,000 Operating expenses 124,500 Units purchased consisted of 32,000 units at $3.20 on May 10; 63,000 units at $3.40 on August 15; and 22,000 units at $3.70 on November 20. Income taxes are 26% (a) Prepare comparative condensed income statements for 2022 under FIFO and LIFO. (Round answers to decimal places, eg. 5,125.) Kingbird, Inc. Condensed Income Statements FIFO LIFO

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Naming convention is not available, can be slightly different: Solution: Condensed Income Statement For year ended December 31, 2022 FIFO 780000 LIFO 780000 Sales Revenue Cost of goods sold: Beginning inventory Cost of goods purchased Cost of goods available for sale Less: Ending inventory Cost of goods sold Gross profit (sales - Cost of goods sold) Operating expenses Income before income taxes Income tax expense (26%) Net income 43500 43500 398000 398000 441500 441500 10690091500 334600 350000 445400 430000 124500 124500 320900 305500 83434' 79430 237466 226070 Ending Inventory units = (14500+117000-102000) = 29500 FIFO: Ending Inventory Cost = (22000*3.70)+(7500*3.4) = 106900 LIFO: Ending Inventory Cost = (43500)+(15000*3.2) = 91500