Fava Company began operations in 2018 and used the LIFO inventory method for both financial reporting and income taxes. At the beginning of 2019, the anticipated cost trends in the industry had changed, so that it adopted the FIFO method for both financial reporting and income taxes. Fava reported revenues of $300,000 and $270,000 in 2019 and 2018, respectively. Fava reported expenses (excluding income tax expense) of $125,000 and $120,000 in 2019 and 2018, which included cost of goods sold of $55,000 and $45,000, respectively. An analysis indicates that the FIFO cost of goods sold would have been lower by $8,000 in 2018. The tax rate is 21%. Fava has a simple capital structure with 15,000 shares of common stock outstanding during 2018 and 2019. It paid no dividends in either year.
Required:
Financial Accounting
Managerial Accounting: The Cornerstone of Business Decision-Making
Financial & Managerial Accounting
Accounting Information Systems
College Accounting, Chapters 1-27
Financial And Managerial Accounting
Corporate Financial Accounting
Essentials of Economics (MindTap Course List)
Management, Loose-Leaf Version
Principles of Economics (MindTap Course List)
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
Principles of Macroeconomics (MindTap Course List)
Essentials of Business Communication (MindTap Course List)
Principles of Microeconomics (MindTap Course List)
Fundamentals of Financial Management (MindTap Course List)
Contemporary Marketing
Brief Principles of Macroeconomics (MindTap Course List)
Accounting Information Systems
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
Foundations of Business (MindTap Course List)
MKTG 12:STUDENT ED.-TEXT
STATISTICS F/BUSINESS+ECONOMICS-TEXT
College Accounting (Book Only): A Career Approach
Financial Accounting
Accounting (Text Only)
College Accounting (Book Only): A Career Approach
Financial & Managerial Accounting
Statistics for Business & Economics, Revised (MindTap Course List)
Fundamentals of Financial Management (MindTap Course List)
Exploring Economics
Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
Principles of Macroeconomics (MindTap Course List)
Pkg Acc Infor Systems MS VISIO CD
PAYROLL ACCT.,2019 ED.(LL)-TEXT
Survey of Accounting (Accounting I)
Corporate Financial Accounting
Economics For Today
Macroeconomics
Economics (MindTap Course List)
Purchasing and Supply Chain Management
Cornerstones of Cost Management (Cornerstones Series)
Microeconomics
Practical Management Science
Cornerstones of Financial Accounting
Managerial Accounting
MACROECONOMICS FOR TODAY
Macroeconomics: Private and Public Choice (MindTap Course List)
Economics: Private and Public Choice (MindTap Course List)
Understanding Management (MindTap Course List)
Microeconomics: Private and Public Choice (MindTap Course List)