The management of Sheridan Inc. is reevaluating the appropriateness of using its present inventory cost flow...

     

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The management of Sheridan Inc. is reevaluating the appropriateness of using its present inventory cost flow method, which is average-cost. The company requests your help in determining the results of operations for 2020 if either the FIFO or the LIFO method had been used. For 2020, the accounting records show these data: Inventories Purchases and Sales Beginning (6,000 units) $24,000 Total net sales (183,000 units) $1,125,450 Ending (13,000 units) Total cost of goods purchased (190,000 units) 846,000 Purchases were made quarterly as follows. Quarter Units Unit Cost Total Cost 50,000 $4.20 $210,000 2 40,000 4.35 174,000 40,000 4.50 180,000 4 60,000 4.70 282,000 190,000 $846,000 Operating expenses were $125,000, and the company's income tax rate is 40%. Prepare comparative condensed income statements for 2020 under FIFO and LIFO. SHERIDAN INC. Condensed Income Statements For the Year Ended December 31, 2020 FIFO LIFO Sales Revenues 1125450 1125450 Cost of Goods Sold Beginning Inventory 24000 24000 Cost of Goods Purchased 846000 846000 Cost of Goods Available for Sale 870000 870000 Ending Inventory Cost of Goods Sold Gross Profit / (Loss) Operating Expenses 00 Operating Expenses Income before Income Taxes Income Tax Expense Net Income / (Loss) The management of Sheridan Inc. is reevaluating the appropriateness of using its present inventory cost flow method, which is average-cost. The company requests your help in determining the results of operations for 2020 if either the FIFO or the LIFO method had been used. For 2020, the accounting records show these data: Inventories Purchases and Sales Beginning (6,000 units) $24,000 Total net sales (183,000 units) $1,125,450 Ending (13,000 units) Total cost of goods purchased (190,000 units) 846,000 Purchases were made quarterly as follows. Quarter Units Unit Cost Total Cost 50,000 $4.20 $210,000 2 40,000 4.35 174,000 40,000 4.50 180,000 4 60,000 4.70 282,000 190,000 $846,000 Operating expenses were $125,000, and the company's income tax rate is 40%. Prepare comparative condensed income statements for 2020 under FIFO and LIFO. SHERIDAN INC. Condensed Income Statements For the Year Ended December 31, 2020 FIFO LIFO Sales Revenues 1125450 1125450 Cost of Goods Sold Beginning Inventory 24000 24000 Cost of Goods Purchased 846000 846000 Cost of Goods Available for Sale 870000 870000 Ending Inventory Cost of Goods Sold Gross Profit / (Loss) Operating Expenses 00 Operating Expenses Income before Income Taxes Income Tax Expense Net Income / (Loss)

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Condensed Income Statements For the Year Ended December 31 ... View the full answer