Problem 6-4A The management of Kingbird, Inc. asks your help in determining the
ID: 2568991 • Letter: P
Question
Problem 6-4A
The management of Kingbird, Inc. asks your help in determining the comparative effects of the FIFO and LIFO inventory cost flow methods. For 2017, the accounting records show these data.
Units purchased consisted of 35,500 units at $3.50 on May 10; 64,250 units at $3.70 on August 15; and 18,710 units at $4.00 on November 20. Income taxes are 29%.
(a) Prepare comparative condensed income statements for 2017 under FIFO and LIFO. (Round answers to 0 decimal places, e.g. 5,125.)
FIFO
LIFO
Inventory, January 1 (9,230 units) $ 30,459 Cost of 118,460 units purchased 436,815 Selling price of 97,790 units sold 684,500 Operating expenses 125,100Explanation / Answer
Kingbird, Inc. Condensed Income Statements For the Year Ended December 31, 2017 FIFO LIFO Sales 684500 684500 Cost of Goods Sold: Beginning Inventory 30459 30459 Cost of Goods Purchased 436815 436815 Cost of Goods Available for Sale 467274 467274 Less: Ending Inventory 116243 102804 Cost of Goods Sold 351031 364470 Gross Profit 333469 320030 Operating Expenses 125100 125100 Income before Income Taxes 208369 194930 Income Tax Expense 60427 56530 Net Income / (Loss) 147942 138400