Analyzing and Interpreting the Financial Statement Effects of LIFO and FIFO Beck Inc. uses a periodic inventory
Question:
Analyzing and Interpreting the Financial Statement Effects of LIFO and FIFO
Beck Inc. uses a periodic inventory system. At the end of the annual accounting period, December 31, 2012, the accounting records provided the following information for product 2:
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. For each case, show the computation of the ending inventory.
2. Compare the pretax income and the ending inventory amounts between the two cases. Explain the similarities and differences.
3. Which inventory costing method may be preferred for income tax purposes?Explain.
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =...
Transcribed Image Text:
Unit Cost Units Inventory, December 31, 2011 For the year 2012: Purchase, March 5 Purchase, September 19 Sale ($28 cach) Sale ($30 each) Operating expenses (excluding income tax expense) 7,000 19,000 10,000 11 16,000 $500,000
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Req 1 BECK INC Income Statement For the Year Ended December 31 2012 Case A Case B FIFO LIFO Sales revenue1 704000 704000 Cost of goods sold Beginning ...View the full answer
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