Question

Check my work Required information E7-7 Analyzing and Interpreting the Financial Statement Effects of LIFO and FIFO LO7-2, 7-3 Part 1 of 2 [The following information applies to the questions displayed below.] 0.62 points Broadhead 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: Skipped Units 2,850 Unit Cost $ 12 10 Inventory, December 31, prior year For the current year: Purchase, April 11 Purchase, June 1 Sales ($53 each) Operating expenses (excluding income tax expense) 8,890 7,950 10,880 eBook Print $191,500 References E7-7 Part 2 2. Compute the difference between the pretax income and the ending inventory amount for the two cases.

Answer 1

Answer

• Requirement 2

	FIFO	LIFO	Weighted Average Method
Pretax Income	$ 270,640.00	$          236,590.00	$ 34,050
Ending Inventory	$ 127,850	$ 93,800	$ 34,050

--Working

	FIFO	LIFO
Sales Revenue	$ 576,640.00	$          576,640.00
(-) Cost of Goods Sold (as calculated above)	$ 114,500.00	$          148,550.00
Gross Margin	$ 462,140.00	$          428,090.00
(-) Operating Expenses	$ 191,500.00	$          191,500.00
Income (Loss) from Operations	$ 270,640.00	$          236,590.00

FIFO	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Beginning Inventory	2850	$                12.00	$                      34,200.00	2850	$               12.00	$               34,200.00	0	$                 12.00	$                         -
Purchases:
11-Apr	8890	$                10.00	$                      88,900.00	8030	$               10.00	$               80,300.00	860	$                 10.00	$            8,600.00
01-Jun	7950	$                15.00	$                    119,250.00	0	$               15.00	$                              -	7950	$                 15.00	$        119,250.00
TOTAL	19690		$                    242,350.00	10880		$            114,500.00	8810		$        127,850.00
LIFO	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Beginning Inventory	2850	$                12.00	$                      34,200.00	0	$               12.00	$                              -	2850	$                 12.00	$          34,200.00
Purchases:
11-Apr	8890	$                10.00	$                      88,900.00	2930	$               10.00	$               29,300.00	5960	$                 10.00	$          59,600.00
01-Jun	7950	$                15.00	$                    119,250.00	7950	$               15.00	$            119,250.00	0	$                 15.00	$                         -
TOTAL	19690		$                    242,350.00	10880		$            148,550.00	8810		$          93,800.00