Taylor Corporation reports inventory and cost of goods sold based on calculations from a LIFO periodic inventory system. Thecompany's records under this system reveal the following inventory layers at the beginning of 2021 (listed in chronological order ofacquisition):18,000 units @ $1023,000 units @ $15Beginning inventory$180,000345,000$525,000During 2021, 46,000 units were purchased for $20 per unit. Due to unexpected demand for the company's product, 2021 sales totaled56,000 units at various prices, leaving 31,000 units in ending inventory.Required:1. Calculate the amount to report for cost of goods sold for 2021.2. Determine the amount of LIFO liquidation profit that the company must report in a disclosure note to its 2021 financial statements.Assume an income tax rate of 25%.3. If the company decided to purchase an additional 10,000 units at $20 per unit at the end of the year, how much Income tax currentlypayable would be saved?1. Cost of goods sold2 LIFO liquidation profit3. Income tax payable

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Chapter18: Accounting Periods And Methods

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Question

Taylor Corporation reports inventory and cost of goods sold based on calculations from a LIFO periodic inventory system. The
company's records under this system reveal the following inventory layers at the beginning of 2021 (listed in chronological order of
acquisition):
18,000 units @ $10
23,000 units @ $15
Beginning inventory
$180,000
345,000
$525,000
During 2021, 46,000 units were purchased for $20 per unit. Due to unexpected demand for the company's product, 2021 sales totaled
56,000 units at various prices, leaving 31,000 units in ending inventory.
Required:
1. Calculate the amount to report for cost of goods sold for 2021.
2. Determine the amount of LIFO liquidation profit that the company must report in a disclosure note to its 2021 financial statements.
Assume an income tax rate of 25%.
3. If the company decided to purchase an additional 10,000 units at $20 per unit at the end of the year, how much Income tax currently
payable would be saved?
1. Cost of goods sold
2 LIFO liquidation profit
3. Income tax payable

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