Required information E7-7 (Algo) Analyzing and Interpreting the Financial Statement Effects of LIFO and FIFO LO7-2, 7-3 [The following information applies to the questions displayed below] Emily Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 2: Unit Units Cost Purchase, April 11 Purchase, June 11 Inventory, December 31, prior year For the current year: Sales ($51 each) 2,828 $11 8,830 12 7,870 17 10,900 Operating expenses (excluding income tax expense) $187,000 E7-7 Part 1 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 the Yea EMILY COMPANY Income Statement 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 Sales revenue EMILY COMPANY Income Statement For the Year Ended December 31, current year Case A FIFO $ 555,900 Cost of goods sold: Beginning inventory $ 31,020 Purchases 239,750 Goods available for sale 270,770 Ending inventory 239,750 Cost of goods sold Gross profit Operating expenses Pretax income 129150 316,150 187,000 Case B LIFO $ 555,900 $ 31,020 239,750 270,770 239,750 187,000 Required information E7-7 (Algo) Analyzing and Interpreting the Financial Statement Effects of LIFO and FIFO LO7-2, 7-3 [The following information applies to the questions displayed below.] Emily Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 2: Units Purchase, April 11 Purchase, June 1 Inventory, December 31, prior year For the current year: Sales ($51 each) Unit Cost 2,820 $11 8,830 12 7,870 17 Operating expenses (excluding income tax expense) 10,900 $187,000 E7-7 Part 2 2. Compute the difference between the pretax income and the ending inventory amount for the two cases. Comparison of Amounts Pretax income Ending inventory Case A FIFO Case B LIFO Difference Help Save & Ex Required information E7-7 (Algo) Analyzing and Interpreting the Financial Statement Effects of LIFO and FIFO LO7-2, 7-3 [The following information applies to the questions displayed below] Emily Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 2: Inventory, December 31, prior year For the current year: Units Unit Cost 2,828 $11 8,830 12 7,870 17 10,900 Operating expenses (excluding income tax expense) $187,000 Purchase, April 11 Purchase, June 1 Sales ($51 each) 22 E7-7 Part 3 3. Which inventory costing method may be preferred for income tax purposes? Which inventory costing method may be preferred for income tax purposes