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.) Emilly Company uses a periodic Inventory system. At the end of the annual accounting perlod, December 31 of the current year, the accounting records provided the following information for product 2: Units 2,950 Unit Cost $12 Inventory, December 31, prior year For the current years Purchase, April 11 Purchase, June 1 Sales ($59 each) Operating expenses (excluding incone tax expense) 8,920 7,810 10,820 13 18 $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 : LIFO EMILY COMPANY Income Statement For the Year Ended December 31, current year Case A FIFO $ 638,380 Case B LIFO 638,380 Sales revenue Cost of goods sold: Beginning inventory Purchases $ $ 35,400 256,540 35,400 256,540 291,940 291,940 Goods available for sale Ending inventory Cost of goods sold Gross profit Operating expenses Pretax income E7-7 Part 2 2. Compute the difference between the pretax income and the ending inventory amount for the two cases. Comparison of Amounts Case A Case B FIFO LIFO Difference Pretax income Ending inventory