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 Unit Cost $ 11 2,950 Inventory, December 31, prior year For the current year: Purchase, April 11 Purchase, June 1 Sales ($55 each) Operating expenses (excluding income tax expense) 8,890 7,880 10,830 12 17 $185,000 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. EMILY COMPANY Income Statement For the Year Ended December 31, current year Case A FIFO Case B LIFO $ 595,650 $ 595,650 Sales revenue Cost of goods sold: Beginning inventory Purchases $ $ 32,450 240,640 32,450 240,640 Goods available for sale 273,090 273,090 Ending inventory Cost of goods sold Gross profit Operating expenses 185,000 185,000 Pretax income 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 2,950 Unit Cost $11 Inventory, December 31, prior year For the current year: Purchase, April 11 Purchase, June 1 Sales ($55 each) Operating expenses (excluding income tax expense) 8,890 7,880 10,830 12 17 $185,000 E7-7 Part 2 2. Compute the difference between the pretax income and the ending inventory amount for the two cases. Answer is not complete. Comparison of Amounts Case A Case B FIFO LIFO Difference 43,540 $ 50,200 X 35,400 X $ 28,740 X Pretax income Ending inventory