Givoly Incorporated 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		6,800	$ 8
For the current year:
Purchase, March 5		18,800	6
Purchase, September 19		9,800	2
Sale ($30 each)		8,000
Sale ($32 each)		15,800
Operating expenses (excluding income tax expense)	$ 398,000

Required:

Prepare a separate income statement through pretax income that details cost of goods sold for (a) Case A: FIFO and (b) Case B: LIFO.

Compute the difference between the pretax income and the ending inventory amounts for the two cases.

Which inventory costing method may be preferred for income tax purposes?

Complete this question by entering your answers in the tabs below.

• Required 1
• Required 2
• Required 3

Prepare a separate income statement through pretax income that details cost of goods sold for (a) Case A: FIFO and (b) Case B: LIFO. Note: Loss amounts should be indicated with a minus sign.

	GIVOLY INCORPORATED Income Statement For the Year Ended December 31, current year Case A Case B FIFO LIFO Cost of goods sold: Beginning inventory Purchases Purchases Goods available for sale 0 0 Sales revenue Cost of goods sold Pretax income/loss

• required 2

Compute the difference between the pretax income and the ending inventory amounts for the two cases.

	Comparison of Amounts Case A Case B Difference FIFO LIFO Pretax income Ending inventory

Complete this question by entering your answers in the tabs below.

• Required 1
• Required 2
• Required 3

Which inventory costing method may be preferred for income tax purposes?

	Which inventory costing method may be preferred for income tax purposes?