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The Brick Company had cash sales of $229,900 for Year 1, its first year of operation. On April 2, the company purchased 158 units of inventory at $230 per unit. On September 1, an additional 119 units were purchased for $253 per unit. The company had 62 units on hand at the end of the year. The companys income tax rate is 40 percent. All transactions are cash transactions. Required

1. The preceding paragraph describes five accounting events: (1) a sales transaction, (2) the first purchase of inventory, (3) a second purchase of inventory, (4) the recognition of cost of goods sold expense, and (5) the payment of income tax expense. Show the amounts of each event in horizontal statements models, assuming first a FIFO and then a LIFO cost flow.
2. Compute net income using FIFO.
3. Compute net income using LIFO.

5. Which method, FIFO or LIFO, produced the larger amount of assets on the balance sheet?

THE BRICK COMPANY Effect of Events on Financial Statements Panel 1: FIFO Cost Flow Income Statement Retained Revenue Earnings Expenses Balance Sheet Event No. Statement of Cash Flows Cash Inventory Net Income 1. + = 2. + = + 3. 3. 4. . + = = 5. + = Balance 0 + 0 = 0 0 - 0 = 0 0 Panel 2: LIFO Cost Flow + 1. 2. 3. . + = + + + = 4. 5. 5 Balance + + 0 + 0 = 0 0 - 0 = 0 0 Required A Required B > Required a. The preceding paragraph describes five accounting events: (1) a sales transaction, (2) the first purchase of inventory, (3) a second purchase of inventory, (4) the recognition of cost of goods sold expense, and (5) the payment of income tax expense. Show the amounts of each event in horizontal statements models, assuming first a FIFO and then a LIFO cost flow. b. Compute net income using FIFO. c. Compute net income using LIFO. e. Which method, FIFO or LIFO, produced the larger amount of assets on the balance sheet? Complete this question by entering your answers in the tabs below. Required A Required B Required C Required E Compute net income using FIFO. (Round your final answer to the nearest whole dollar amount.) Net income assuming FIFO cost flow Required a. The preceding paragraph describes five accounting events: (1) a sales transaction, (2) the first purchase of inventory, (3) a second purchase of inventory, (4) the recognition of cost of goods sold expense, and (5) the payment of income tax expense. Show the amounts of each event in horizontal statements models, assuming first a FIFO and then a LIFO cost flow. b. Compute net income using FIFO. c. Compute net income using LIFO. e. Which method, FIFO or LIFO, produced the larger amount of assets on the balance sheet? Complete this question by entering your answers in the tabs below. Required A Required B Required C Required E Compute net income using LIFO. (Round your final answer to the nearest whole dollar amount.) Net income assuming LIFO cost flow Required a. The preceding paragraph describes five accounting events: (1) a sales transaction, (2) the first purchase of inventory, (3) a second purchase of inventory, (4) the recognition of cost of goods sold expense, and (5) the payment of income tax expense. Show the amounts of each event in horizontal statements models, assuming first a FIFO and then a LIFO cost flow. b. Compute net income using FIFO. c. Compute net income using LIFO. e. Which method, FIFO or LIFO, produced the larger amount of assets on the balance sheet? Complete this question by entering your answers in the tabs below. Required A Required B Required C Required E Which method, FIFO or LIFO, produced the larger amount of assets on the balance sheet? Method

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