The management of Shamrock, Inc. asks your help in determining the comparative effects of the FIFO and LIFO inventory cost flow methods. For 2022, the accounting records show these data.Inventory, January 1 (12,500 units) $ 50,000Cost of 129,000 units purchased 568,200Selling price of 104,000 units sold 796,000Operating expenses 129,500Units purchased consisted of 36,000 units at $4.20 on May 10; 67,000 units at $4.40 on August 15; and 26,000 units at $4.70 on November 20. Income taxes are 28%.(a) Prepare comparative condensed income statements for 2022 under FIFO and LIFO.  (Include calculations)

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Asked Nov 30, 2019
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The management of Shamrock, Inc. asks your help in determining the comparative effects of the FIFO and LIFO inventory cost flow methods. For 2022, the accounting records show these data.

Inventory, January 1 (12,500 units)   $ 50,000
Cost of 129,000 units purchased   568,200
Selling price of 104,000 units sold   796,000
Operating expenses   129,500


Units purchased consisted of 36,000 units at $4.20 on May 10; 67,000 units at $4.40 on August 15; and 26,000 units at $4.70 on November 20. Income taxes are 28%.

(a) Prepare comparative condensed income statements for 2022 under FIFO and LIFO.  (Include calculations)

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Expert Answer

Step 1

Income statement:

 

The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

Step 2

a.

 

Prepare comparative condensed income statements for Incorporation S for ...

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Particulars FIFO LIFO $796,000 $796,000 Sales revenue Less: Cost of goods sold: Beginning inventory Add: Purchases Cost of goods available for sales 50,000 50,000 568,200 568,200 618,200 618,200 172,800 155,000 Less: Ending Inventory Cost of goods sold Gross profit Less: Operating expenses Profit before tax Income tax expenses@28% Net Income 463,200 350,600 332,800 129,500 129,500 221,100 203,300 445,400 61.908 56,924 S159.192 $146.376

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