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Emily Company uses a periodic inventory system. At the end of the annual accounting period,...

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Accounting

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:

Units Unit Cost
Inventory, December 31, prior year 2,890 $ 13
For the current year:
Purchase, April 11 8,960 14
Purchase, June 1 7,950 19
Sales ($57 each) 10,870
Operating expenses (excluding income tax expense) $ 188,500

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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. EMILY COMPANY Income Statement For the Year Ended December 31, current year Case A FIFO Case Case B LIFO Cost of goods sold: Goods available for sale Cost of goods sold 2. Compute the difference between the pretax income and the ending inventory amount for the two cases. Comparison of Amounts Case A Case B FIFO LIFO Difference Pretax income Ending inventory 3. Which inventory costing method may be preferred for income tax purposes? Which inventory costing method may be preferred for income tax purposes

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