A company reports inventory and cost of goods sold based on calculations from a LIFO periodic inventory system. The company’s records under this system reveal the following inventory layers at the beginning of 2024 (listed in chronological order of acquisition):

During 2024, 30,000 units were purchased for $25 per unit. Due to unexpected demand for the company’s product,2024 sales totaled 40,000 units at various prices, leaving 15,000 units in ending inventory.

Required:
1. Calculate the amount to report for cost of goods sold for 2024.
2. Determine the amount of LIFO liquidation profit that the company must report in a disclosure note to its 2024 financial statements. Assume an income tax rate of 25%.
3. If the company decided to purchase an additional 10,000 units at $25 per unit at the end of the year, how much income tax currently payable would be saved?

Transcribed Image Text:

10,000 units @ $15 15,000 units @ $20 Beginning inventory $150,000 300,000 $450,000