Analyzing and Interpreting Income Manipulation Under the LIFO Inventory Method Atlantic Company sells electronic test equipment that

Question:

Analyzing and Interpreting Income Manipulation Under the LIFO Inventory Method
Atlantic Company sells electronic test equipment that it acquires from a foreign source. During the year 2011, the inventory records reflected the following:

Unit Cost Total Cost Units Beginning inventory Purchases 20 42 $11,500 $230,000 10,000 Sales (47 units at $24,500 each)

Inventory is valued at cost using the LIFO inventory method.
Required:
1. Complete the following income statement summary using the LIFO method and the periodic inventory system (show computations):

Analyzing and Interpreting Income Manipulation Under the LIFO In

2. The management, for various reasons, is considering buying 20 additional units before December 31, 2011, at $9,500 each. Restate the income statement (and ending inventory), assuming that this purchase is made on December 31, 2011.
3. How much did pretax income change because of the decision on December 31, 2011? Assuming that the unit cost of test equipment is expected to continue to decline in 2012, is there any evidence of income manipulation?Explain.

Ending Inventory
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 =...