Question

The management of Sunland Company asks your help in determining the comparative effects of the FIFO and LIFO inventory cost flow methods. For 2017, the accounting records show these data. Inventory, January 119.630 units) $36,594 Cost of 121.990 units purchased 512,736 Selling price of 106,380 units sold 698,900 Operating expenses 128.110 Units purchased consisted of 35,820 units at $4.00 on May 10; 61,030 units at $4.20 on August 15; and 25,140 units at $4,50 on November 20. Income taxes are 27% (a) Prepare comparative condensed income statements for 2017 under FIFO and LIFO. (Round answers to decimal places.es 5,125) Sunland Company Condensed Income Statements For the Year Ended December 31, 2017 FIFO - LIFO Sales Cost of Goods Sold Beinventory Cost of Goods Purchased Ofe e

Answer 1

FIFO METHOD
		COST OF GOODS AVAILABLE FOR SALE			COST OF GOODS SOLD			ENDING INVENTORY
Date	Particulars	Units	Rate	Total	Units	Rate	Total	Units	Rate	Total
Jan, 01	Beginning inventory	9630	$                           3.80	$                        36,594
Purchases
May, 10	Purchases	35820	$                           4.00	$                    1,43,280
Aug, 15	Purchases	61030	$                           4.20	$                    2,56,326
Nov, 20	Purchases	25140	$                           4.50	$                    1,13,130
	Goods Avaiable for sold	131620		$                    5,49,330
	Sales	106380			9630	$               3.80	$           36,594
					35820	$               4.00	$       1,43,280
					60930	$               4.20	$       2,55,906	100	$           4.20	$                 420
								25140	$           4.50	$       1,13,130
	TOTAL	369620		$10,98,660	106380		$4,35,780	25240		$1,13,550
LIFO METHOD
		COST OF GOODS AVAILABLE FOR SALE			COST OF GOODS SOLD			ENDING INVENTORY
Date	Particulars	Units	Rate	Total	Units	Rate	Total	Units	Rate	Total
Jan, 01	Beginning inventory	9630	$                           3.80	$                        36,594
Purchases
May, 10	Purchases	35820	$                           4.00	$                    1,43,280
Aug, 15	Purchases	61030	$                           4.20	$                    2,56,326
Nov, 20	Purchases	25140	$                           4.50	$                    1,13,130
	Goods Avaiable for sold	131620		$                    5,49,330
	Sales	106380			25140	$               4.50	$       1,13,130
					61030	$               4.20	$       2,56,326
					20210	$               4.00	$           80,840	15610	$           4.00	$           62,440
								9630	$           3.80	$           36,594
	TOTAL	369620		$10,98,660	106380		$4,50,296	25240		$99,034
ANSWER =A)
	INCOME STATEMETN	FIFO	LIFO
	Sales Revenue	$                  6,98,900	$                  6,98,900
	Cost of Goods Sold
	Beginning inventory	$                      36,594	$                      36,594
	Add: Cost of Goods Purchased	$                  5,12,736	$                  5,12,736
	Goods Avaialble for Sold	$                  5,49,330	$                  5,49,330
	Less: Ending inventory	$1,13,550	$99,034
	Cost of Goods Sold	$                  4,35,780	$                  4,50,296
	Gross Profit	$                  2,63,120	$                  2,48,604
	Operating expenses	$                  1,28,110	$                  1,28,110
	Net Operating income	$                  1,35,010	$                  1,20,494
	Less: Income taxes @ 27%	$                      36,453	$                      32,533
	Net Income	$                      98,557	$                      87,961