Question

The board of directors of Flint 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 @	$56
Inventory, January 1		6,300	units @	22
Purchases		6,200	units @	24
		10,200	units @	28
		6,700	units @	33
Inventory, December 31		8,400	units @	?
Operating expenses		$222,000

Prepare a condensed income statement for the year on both bases for comparative purposes.

Prepare a condensed income statement for the year on both bases for comparative purposes. Flint Corporation Condensed Income Statement For the year ended December 31 First-in, first-out Last-in, first-out $ $ $ 6A tA

Answer 1

Condensed Income Statement
For the year ended December 31
	First-in, first-out		Last-in, first-out
Sales Revenue		1176000		1176000
Cost of Goods Sold:
Inventory, Jan. 1	138600		138600
Purchases	655500		655500
Cost of Goods Available	794100		794100
Inventory, Dec. 31	268700		189000
Cost of Goods Sold		525400		605100
Gross Profit		650600		570900
Operating Expenses		222000		222000
Net Income / (Loss)		428600		348900
Workings:
Inventory, Dec. 31:
First-in, first-out	268700	=(6700*33)+(8400-6700)*28
Last-in, first-out	189000	=(6300*22)+(8400-6300)*24