Question - In 2016, Harris Company had sales revenues of $2,400,000 (100,000 units@ $24), all in cash. The beginning of the year inventory value was 480,000 (30,000@$16) Purchase during the year was $1,440,000 (80,000@ $18). Assume 40% income tax rate. Based on the above information, answer the following questions:
1. What is the ending inventory value for 2016 under 1) FIFO method and 2) LIFO method?
2. What is the Cost of Goods Sold for 2016 under 1) FIFO method and 2) LIFO method?
3. What is the difference in tax expense for 2016 between the LIFO and FIFO methods? Which method leads to higher taxes for 2016?
4. What is the difference in net income for 2016 between the LIFO and FIFO methods? Which method leads to higher net income for 2016?