Question

Towing Company employs a periodic inventory system and sells its inventory
to customers for $34 per unit. Towing Company had the following inventory
information available for the month of May:

May 1    Beginning inventory 2,200 units @ $17 cost per unit
May 8    Sold 1,700 units
May 13   Purchased 1,800 units @ $13 cost per unit
May 18   Sold 1,600 units
May 21   Purchased 1,300 units @ $23 cost per unit
May 22   Purchased 1,100 units @ $15 cost per unit 
May 28   Sold 1,300 units
May 30   Purchased 1,600 units @ $10 cost per unit

During May, Towing Company reported operating expenses of $49,000 and had
an income tax rate of 32%.

Calculate the amount of net income reported on Towing Company's income
statement for May using the FIFO method.

Answer 1

	Units	Rate	Amount
Sale from beginning inventory	2,200	$ 17	$ 37,400
Sale from May 13 Purchase	1,800	$ 13	$ 23,400
Sale from May 21 Purchase	600	$ 23	$ 13,800
Cost of goods sold	4,600		$ 74,600

Sales (4,600*$34)	$ 156,400
Less: Cost of goods sold	$ (74,600)
Less: Operating expenses	$ (49,000)
Income before income tax	$    32,800
Less: Income tax expenses ($32,800*32%)	$ (10,496)
Net income under FIFO Method	$    22,304

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