USF - Professor Susan Bennet

Required information E7-11 (Algo) Evaluating the Cholce among Thres Alternative Inventory Methods Based on Income and Cash Flow Effects LO7-2, 7-3 [The following information applies to the questions disclayed below) Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise Inventory (ending Inventory December 31, prior year) 2,040 units at $37, purchases, 7,950 units at $39, expenses fexcluding income taxes). $193,400, ending Inventory por physical count at December 31, current year, 1730 units: sales. 8,260 units, sales price per unit 579; and average income tax rate, 34 percent E7-11 Part 2 2. Between FIFO and LIFO, which method is preferable in terms of (a net income and (b) income taxes paid cash flow? Net income Income espaid Required Information E7-11 (Algo) Evaluating the Cholce among Three Alternative Inventory Methods Based on Income and Cash Flow Effects L07-2,7-3 [The following information applies to the questions displayed below) Daniel Company uses a periodic inventory system. Data for the current year: beginning merchandise inventory (ending Inventory December 31, prior year), 2,040 units at $37; purchases, 7.950 units at $39, expenses (excluding income taxes), $193,406, ending inventory per physical count at December 31, current year, 1730 units; sales, 8.260 units, sales price per unit, $79; and average income tax rate, 34 percent E7-11 Part 3 3. Between FIFO and LIFO, which method is preferable in terms of (a) net income and (6) Income taxes paid (cash flow), assuming that prices were falling? Net Income Income taxes paid (cash flow)