The following information pertains to the inventory of Parvin Company during Year 2. January 1 April...

 

Transcribed Image Text:

The following information pertains to the inventory of Parvin Company during Year 2. January 1 April 1 October 1 Beginning Inventory Purchased Purchased 500 units @ $34 2,200 units @ $39 700 units @ $42 During Year 2, Parvin sold 3,100 units of inventory at $85 per unit and incurred $42,500 of operating expenses. Parvin currently uses the FIFO method but is considering a change to LIFO. All transactions are cash transactions. Assume a 40 percent income tax rate. Parvin started the period with cash of $77,000, inventory of $17,000, common stock of $52,000, and retained earnings of $42,000. d. Determine the cash flow from operating activities under FIFO and LIFO. (Amounts to be deducted should be indicated with sign.) Parvin Company Cash Flows from Operating Activities. Cash flows from operating activities: Cash inflow from customers Cash outflow for inventory Cash outflow for operating expenses Cash outflow for income tax expense Net cash flow from operating activities FIFO LIFO $ 320,000 320,000 0 The following information pertains to the inventory of Parvin Company during Year 2. January 1 April 1 October 1 Beginning Inventory Purchased Purchased 500 units @ $34 2,200 units @ $39 700 units @ $42 During Year 2, Parvin sold 3,100 units of inventory at $85 per unit and incurred $42,500 of operating expenses. Parvin currently uses the FIFO method but is considering a change to LIFO. All transactions are cash transactions. Assume a 40 percent income tax rate. Parvin started the period with cash of $77,000, inventory of $17,000, common stock of $52,000, and retained earnings of $42,000. d. Determine the cash flow from operating activities under FIFO and LIFO. (Amounts to be deducted should be indicated with sign.) Parvin Company Cash Flows from Operating Activities. Cash flows from operating activities: Cash inflow from customers Cash outflow for inventory Cash outflow for operating expenses Cash outflow for income tax expense Net cash flow from operating activities FIFO LIFO $ 320,000 320,000 0