Refer to the preceding problem. Suppose 100 extra units had been acquired on December 30, 20X8, for $80 each, a total of $8,000. How would net income and income taxes have been affected under FIFO and under LIFO? Show a tabulated comparison.
In preceding problem, Contractor Supply Company is a wholesaler for commercial builders. The company uses a periodic inventory system. The data concerning Kemtone cooktops for the year 20X8 follow:

The sales during 20X8 were made at the following selling prices:

Prepare a comparative statement of gross profit for the year ended December 31, 20X8, using FIFO, LIFO, and average cost inventory methods. Remember that when average cost is used with the periodic inventory system we refer to it as the weighted-average method.
By how much would income taxes differ if Contractor Supply Company had used LIFO instead of FIFO for Kemtone cook tops? Assume a 40% income taxrate.

  • CreatedFebruary 20, 2015
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