Required information E7-8 (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.) Givoly Inc. 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 6,000 Cost $10 18,000 Inventory, December 31, prior year For the current year: Purchase, March 5 Purchase, September 19 Sale ($25 each) Sale ($33 each) Operating expenses (excluding income tax expense) 8 4 9,000 8,800 15,000 $ 390,000 E7-8 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. (Loss amounts should be indicated with a minus sign.) GIVOLY INC. Income Statement For the Year Ended December 31, current year Case A FIFO Case B LIFO Cost of goods sold: Goods available for sale 0 0 Cost of goods sold Pretax income/loss 2. Compute the difference between the pretax income and the ending inventory amounts for the two cases. Comparison of Amounts Case A Case B FIFO LIFO Difference Pretax income Ending inventory