Taylor Corporation reports inventory and cost of goods sold based on calculations from a LIFO periodic...

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Accounting

Taylor Corporation reports inventory and cost of goods soldbased on calculations from a LIFO periodic inventory system. Thecompany’s records under this system reveal the following inventorylayers at the beginning of 2021 (listed in chronological order ofacquisition):
10,000 units @ $15 $ 150,000
15,000 units @ $20 300,000
Beginning inventory $ 450,000

During 2021, 30,000 units were purchased for $25 per unit. Due tounexpected demand for the company’s product, 2021 sales totaled40,000 units at various prices, leaving 15,000 units in endinginventory.

Required:
1. Calculate the amount to report for cost ofgoods sold for 2021.
2. Determine the amount of LIFO liquidation profitthat the company must report in a disclosure note to its 2021financial statements. Assume an income tax rate of 25%.
3. If the company decided to purchase anadditional 10,000 units at $25 per unit at the end of the year, howmuch income tax currently payable would be saved?

Answer & Explanation Solved by verified expert

3.9 Ratings (803 Votes)

1 Cost of goods sold for 2021 Latest purchase 3000025 750000 Previous purchase 1000020 200000 Cost of goods sold 950000 2 Unit Included in cost of goods See Answer

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10,000 units @ $15	$	150,000
15,000 units @ $20		300,000
Beginning inventory	$	450,000