Question

The board of directors of Metlock Corporation is considering whether or not it should instruct the accounting department to shift from a first-in, first-out (FIFO) basis of pricing inventories to a last-in, first-out (LIFO) basis. The following information is available.

Sales		21,000	units @	$62
Inventory, January 1		5,700	units @	25
Purchases		5,900	units @	27
		10,300	units @	31
		7,000	units @	37
Inventory, December 31		7,900	units @	?
Operating expenses		$248,000

Prepare a condensed income statement for the year on both bases for comparative purposes. Metlock Corporation Condensed Income Statement For the year ended December 31 First-in, first-out Last-in, first-out

ANSWER ONLY, NO NEED TO SHOW YOUR WORK

Answer 1

Metlock Corporation Condensed Income Statement For the Year Ended December 31 First in First out 1,302,000.00 Last in First out 1,302,000.00 Sales Revenue Cost of goods sold Inventory Jan 1 Purchases Cost of goods available Inventory Dec 31 Cost of goods sold Gross profit Operating expense Net Income/(loss) 142,500.00 737,600.00 880,100.00 286,900.00 142,500.00 737,600.00 880,100.00 201,900.00 to tota 593,200.00 708,800.00 248,000.00 460,800.00 A tota 678,200.00 623,800.00 248,000.00 375,800.00 Note : FIFO Method Says that, The Goods which are Purchased first will be sold first So The Goods which are purchased last will be in Ending Inventory LIFO Method Says that, The Goods which are Purchased last will be sold first So The Goods which are purchased first will be in Ending Inventory So Ending Inventory 7900 units consists of: 7000 units @ $37 900 Units @ $31 So Ending Inventory 7900 units consists of: 5700 units @ $25 2200 Units @ $27