FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Bank Print Supplies, Inc., sells laser printers and supplies. Bank Print Supplies, Inc., is a corporation subject to a 30% income tax.
✪ (Click the icon to view additional information.)
Bank Print Supplies' income statement-excluding the effects of income tax under each of the average-cost, FIFO, and LIFO inventory costing methods-is given.
EEE (Click the icon to view the income statement.)
Read the requirements.
Compute the company's income tax expense under the average-cost, FIFO, and LIFO inventory costing methods.
Bank Print Supplies, Inc.
Income Statement
Year Ended December 31
Sales revenue
Cost of goods sold
Gross profit
Average Cost FIFO
$
$
13,200 $ 13,200 $
6,000 5,943
$
7,200 $ 7,257 $
4,050
4,050
3,150 $ 3,207 $
LIFO
13,200
6,080
7,140
4,050
3,090
Operating expenses
Net income before tax
Income tax expense
Which method would you select to (a) maximize income before tax and (b) minimize income tax expense?
(a) The income before taxes is maximized by using the
method of inventory costing.
(b) The income taxes are minimized by using the
method of inventory costing.
expand button
Transcribed Image Text:Bank Print Supplies, Inc., sells laser printers and supplies. Bank Print Supplies, Inc., is a corporation subject to a 30% income tax. ✪ (Click the icon to view additional information.) Bank Print Supplies' income statement-excluding the effects of income tax under each of the average-cost, FIFO, and LIFO inventory costing methods-is given. EEE (Click the icon to view the income statement.) Read the requirements. Compute the company's income tax expense under the average-cost, FIFO, and LIFO inventory costing methods. Bank Print Supplies, Inc. Income Statement Year Ended December 31 Sales revenue Cost of goods sold Gross profit Average Cost FIFO $ $ 13,200 $ 13,200 $ 6,000 5,943 $ 7,200 $ 7,257 $ 4,050 4,050 3,150 $ 3,207 $ LIFO 13,200 6,080 7,140 4,050 3,090 Operating expenses Net income before tax Income tax expense Which method would you select to (a) maximize income before tax and (b) minimize income tax expense? (a) The income before taxes is maximized by using the method of inventory costing. (b) The income taxes are minimized by using the method of inventory costing.
Data table
Sales revenue
Cost of goods sold
Gross profit
Operating expenses
Net income before tax
$
$
Bank Print Supplies, Inc.
Income Statement
Year Ended December 31
FIFO
Average Cost
Print
13,200 $
6,000
7,200
4,050
3,150 $
Done
13,200 $
5,943
7,257
4,050
3,207 S
LIFO
13,200
6,060
7,140
4,050
3,090
More info
Assume Bank started the year with 90 containers of ink (average cost of $9.20
each, FIFO cost of $8.80 each, LIFO cost of $7.90 each). During the year, the
company purchased 720 containers of ink at $10.10 and sold 600 units for $22.00
each. Bank paid operating expenses throughout the year, a total of $4,050.
Print
Done
Print
Requirements
Compute the company's income tax expense under the average-cost, FIFO, and
LIFO inventory costing methods. Which method would you select to (a) maximize
income before tax and (b) minimize income tax expense? (Round your answer to
the nearest whole dollar.)
X
Done
expand button
Transcribed Image Text:Data table Sales revenue Cost of goods sold Gross profit Operating expenses Net income before tax $ $ Bank Print Supplies, Inc. Income Statement Year Ended December 31 FIFO Average Cost Print 13,200 $ 6,000 7,200 4,050 3,150 $ Done 13,200 $ 5,943 7,257 4,050 3,207 S LIFO 13,200 6,060 7,140 4,050 3,090 More info Assume Bank started the year with 90 containers of ink (average cost of $9.20 each, FIFO cost of $8.80 each, LIFO cost of $7.90 each). During the year, the company purchased 720 containers of ink at $10.10 and sold 600 units for $22.00 each. Bank paid operating expenses throughout the year, a total of $4,050. Print Done Print Requirements Compute the company's income tax expense under the average-cost, FIFO, and LIFO inventory costing methods. Which method would you select to (a) maximize income before tax and (b) minimize income tax expense? (Round your answer to the nearest whole dollar.) X Done
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