t The following information pertains to the Inventory of Parvin Company January 1 Apr 11 1 Beginning inventory October 1 Purchased Purchased 300 3,000 units units $21 $26 900 units . $27 During the year, Parvin sold 3,570 units of Inventory at $42 per unit and incurred $15,500 of operating expenses. Parvin currently uses the FIFO method but is considering a change to LIFO. All transactions are cash transactions. Assume a 30 percent income tax rate Parvin started the period with cash of $144,200, Inventory of $6,300, common stock of $127,000, and retained earnings of $23,500 Required a. Prepare Income statements using FIFO and LIFO b. Determine the amount of income tax that Parvin would pay using each cost flow method. c. Determine the cash flow from operating activities under FIFO and LIFO.
t The following information pertains to the Inventory of Parvin Company January 1 Apr 11 1 Beginning inventory October 1 Purchased Purchased 300 3,000 units units $21 $26 900 units . $27 During the year, Parvin sold 3,570 units of Inventory at $42 per unit and incurred $15,500 of operating expenses. Parvin currently uses the FIFO method but is considering a change to LIFO. All transactions are cash transactions. Assume a 30 percent income tax rate Parvin started the period with cash of $144,200, Inventory of $6,300, common stock of $127,000, and retained earnings of $23,500 Required a. Prepare Income statements using FIFO and LIFO b. Determine the amount of income tax that Parvin would pay using each cost flow method. c. Determine the cash flow from operating activities under FIFO and LIFO.
Financial & Managerial Accounting
13th Edition
ISBN:9781285866307
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter13MJ: Mornin' Joe
Section: Chapter Questions
Problem 3IFRS
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Step 1: Introduction to income statement:
VIEWStep 2: Working note- Calculation of cost of goods sold under FIFO and LIFO:
VIEWStep 3: Requirement a- Preparing income statement using FIFO and LIFO:
VIEWStep 4: Requirement b- Determining the income tax to be paid under each method:
VIEWStep 5: Requirement c- Determining the cash flow from operating activities under both methods:
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