Emily Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 2: Inventory, December 31, prior year For the current year: Purchase, April 11 Purchase, June 1 Sales ($52 each) Operating expenses (excluding income tax expense) $ 187,500 Units 2,810 8,850 7,910 10,970 Unit Cost $ 14 15 20 Required: 1. Prepare a separate income statement through pretax income that details cost of goods sold for (a) Case A: FIFO and (b) Case B: LIFO. 2. Compute the difference between the pretax income and the ending inventory amount for the two cases.
Emily Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 2: Inventory, December 31, prior year For the current year: Purchase, April 11 Purchase, June 1 Sales ($52 each) Operating expenses (excluding income tax expense) $ 187,500 Units 2,810 8,850 7,910 10,970 Unit Cost $ 14 15 20 Required: 1. Prepare a separate income statement through pretax income that details cost of goods sold for (a) Case A: FIFO and (b) Case B: LIFO. 2. Compute the difference between the pretax income and the ending inventory amount for the two cases.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Topic Video
Question
220.
Subject :- Accounting
Transcribed Image Text:Emily Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the
accounting records provided the following information for product 2:
Inventory, December 31, prior year
For the current year:
Purchase, April 11
Purchase, June 1
Sales ($52 each)
Operating expenses (excluding income tax expense)
$ 187,500
Units
2,810
8,850
7,910
10,970
Unit Cost
$ 14
15
20
Required:
1. Prepare a separate income statement through pretax income that details cost of goods sold for (a) Case A: FIFO and (b) Case B:
LIFO.
2. Compute the difference between the pretax income and the ending inventory amount for the two cases.
Transcribed Image Text:here are the tables that need to be filled out.
Cost of goods sold:
Beginning inventory
Goods available for sale
Ending inventory
Cost of goods sold
Gross profit
Operating expenses
Pretax income
Pretax income
Ending inventory
EMILY COMPANY
Income Statement
For the Year Ended December 31, current year
Case A
FIFO
0
Case B
LIFO
Case A
FIFO
0
Comparison of Amounts
Case B
LIFO
Difference
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