Question

[The following information applies to the questions displayed below.] Givoly Inc. uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 2: Units Unit Cost Inventory, December 31, prior year 7,000 $ 11 For the current year: Purchase, March 5 19,000 9 Purchase, September 19 10,000 5 Sale ($28 each) 8,000 Sale ($30 each) 16,000 Operating expenses (excluding income tax expense) $ 400,000 Required: 1. Prepare a separate income statement through pretax income that details cost of goods sold for (a) Case A: FIFO and (b) Case B: LIFO. (Loss amounts should be indicated with a minus sign.)

Answer 1

Income statement

	FIFO		LIFO
Sales revenue (8000*28+16000*30)		704000		704000
Cost of goods sold
Beginning inventory (7000*11)	77000		77000
Purchase
March 5 (19000*9)	171000		171000
September 19 (10000*5)	50000		50000
Cost of goods available for sale	298000		298000
Less: Ending inventory	-68000		-122000
Cost of goods sold		230000		176000
Gross profit		474000		528000
Operating expense		400000		400000
Profit before tax		74000		128000