Preparation of condensed income statement by valuation of inventories with LIFO and FIFO method.
(FIFO and LIFO; Income Statement Presentation) The board of directors of Ichiro Corporation is considering whether or not it should instruct the accounting department to shift from a first-in, first-out (FIFO) basis of pricing inventories to a last-in, first-out (LIFO) basis. The following information is available.
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Sales
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21,000 units @ $50
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Inventory, January 1
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6,000 units @ 20
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Purchases
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6,000 units @ 22
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10,000 units @ 25
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7,000 units @ 30
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Inventory, December 31
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8,000 Units @ ?
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Operating expenses
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$200,000
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Instructions
Prepare a condensed income statement for the year on both bases for comparative purposes.