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Easley-O'Hara Office Equipment sells furniture and technology solutions to consumers and to businesses. Most consumers...

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Accounting

Easley-O'Hara Office Equipment sells furniture and technology solutions to consumers and to businesses. Most consumers pay for their purchases with credit cards and business customers make purchases on open account with terms 110, net 30. Costs of furniture inventory purchases have generally been rising and costs of computer inventory purchases have generally been declining. The company's income tax rate is 20 percent. Casey Easley, the general manager, was particularly interested in the financial statement effects of the following facts related to first quarter operations.
a. Credit card sales (discount 2 percent) were $31,000.
b. Sales on account were $84,000. The company expects one-half of the accounts to be paid within the discount period.
c. The company computed cost of goods sold for the transactions in (a) and (b) above under FIFO and LIFO for its two product lines and chose the method for each product that minimizes income taxes:
\table[[,FIFO,LIFO],[Furniture,$25,400,$28,400
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