Question

ABC Company employs a periodic inventory system and sells its inventory to customers
for $27 per unit. ABC Company had the following inventory information available for
the month of May:

May 1    Beginning inventory 2,400 units @ $14 cost per unit
May 8    Sold 1,000 units
May 13   Purchased 1,300 units @ $17 cost per unit
May 18   Sold 1,200 units
May 21   Purchased 1,100 units @ $11 cost per unit
May 28   Sold 300 units
May 30   Purchased 700 units @ $10 cost per unit

During May, ABC Company reported operating expenses of $14,500 and had an income 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

Correct Answer:

ABC company
Income Statements
For the months ended May 31
Periodic :	LIFO
Sales	$    67,500.00
Cost of goods sold	$          31,000
Gross profit	$          36,500
Expenses	$          14,500
Income Before taxes	$    22,000.00
Income tax expense @ 43%	$      9,460.00
Net income	$    12,540.00

Working:

Cost of Goods Available for sale
	Units	Cost per unit	value
Beginning Inventory	24000	$                       14.0	$               3,36,000.0
Purchases	1300	$                       17.0	$                   22,100.0
Purchases	1100	$                       11.0	$                   12,100.0
Purchases	700	$                       10.0	$                     7,000.0
Total	27100		$               3,77,200.0

LIFO
Total Units Available for sale			27100		$            3,77,200
Units Sold			2500
Ending Inventory Units			24600
Valuation
Cost of Goods Sold		700		$                         10.00	7,000.00
		1100		$                         11.00	12,100.00
		700		$                         17.00	11,900.00
Cost of Goods Sold		2500	units		$         31,000.00
Ending Inventory		24600	units		$      3,46,200.00

End of answer.

Please give a thumbs-up, it will be highly appreciated.

Thanks.