Problem: Module 2 Textbook Problem 11 Learning Objective: 2-7 Show how different inventory cost flow methods (specific identification, FIFO, LIFO, and weighted average) affect financial statements The following information pertains to the inventory of Parvin Company: Jan. 1 Apr. 1 Oct. 1 Beginning inventory Purchased Purchased 400 units 2,700 units 1,000 units $20 @ $25 @ $26 During the year, Parvin sold 3,485 units of inventory at $41 per unit and incurred $15,900 of operating expenses. Parvin currently uses the FIFO method but is considering a change to LIFO. All transactions are cash transactions. Assume a 30 percent income tax rate. Parvin started the period with cash of $126,500, inventory of $8,000, common stock of $111,000, and retained earnings of $23.500 Required a. Prepare income statements using FIFO and LIFO. b. Determine the amount of income tax that Parvin would pay using each cost flow method, c. Determine the cash flow from operating activities under FIFO and LIFO. Answer is complete but not entirely correct. Complete this question by entering vour answers in the tabs below. HILLSYMy my youth www. Required A Required B Required Prepare income statements using FIFO and LIFO. (Round intermediate calculations and final answers to the nearest whole dollar amount.) PARVIN COMPANY Income Statements For the Year Ended December 31 FIFO LIFO $ Sales S 142.885 142.885 Cost of goods sold (101,500) 3 (93,600) Gross margin 41,385 49,385 Operating expenses 15,900 15.900 Income before tax 25,485 33.485 Income tax expense (12,353) (11.658) Net income $ 27 202 X $ 21,827 XX Required Required B > Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required A Required B Required LIFO Determine the amount of income tax that Parvin would pay using each cost flow method. FIFO Income tax $ 12,353 $ 11,658 Complete this question by entering your answers in the tabs below. Required a Required B Required Determine the cash flow from operating activities under FIFO and LIFO. (Round intermediate calculations and final answers to the nearest whole dollar amount.) FIFO LIFO Net cash flow from operating activities $ 21,827 $ 21,132