The management of Tinker Inc. asks your help in determining the comparative effects of the FIFO and LIFO inventory cost flow methods. For 2014, the accounting records show these data.
| Inventory, January 1 (10,000 units) |
mce_markernbsp;34,000 |
| Cost of 121,000 units purchased |
477,460 |
| Selling price of 98,400 units sold |
747,400 |
| Operating expenses |
130,700 |
Units purchased consisted of 35,700 units at $3.60 on May 10; 59,500 units at $4.00 on August 15; and 25,800 units at $4.30 on November 20. Income taxes are 30%.
(a) Prepare comparative condensed income statements for 2014 under FIFO and LIFO.