Cansela Corporation uses a periodic inventory system and the LIFO
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Cansela Corporation uses a periodic inventory system and the LIFO method to value its inventory. The company began 2013 with inventory of 4,500 units of its only product. The beginning inventory balance of $64,000 consisted of the following layers: |
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2,000 units at $12 per unit |
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$ |
24,000 |
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2,500 units at $16 per unit |
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40,000 |
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$ |
64,000 |
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During the three years 2013–2015 the cost of inventory remained constant at $18 per unit. Unit purchases and sales during these years were as follows: |
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Purchases |
Sales |
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2013 |
10,000 |
11,000 |
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2014 |
13,000 |
14,500 |
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2015 |
12,000 |
13,000 |
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Required: |
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1. |
Calculate cost of goods sold for 2013, 2014, and 2015. |
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Cost of Goods Sold |
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2013 |
$ |
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2014 |
$ |
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2015 |
$ |
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2. |
Disregarding income tax, determine the LIFO liquidation profit or loss, if any, for each of the three years.(Input all amounts as positive values.) |
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LIFO |
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2013 |
$ |
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2014 |
$ |
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2015 |
$ |
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3. |
Determine the effects of LIFO liquidation on cost of goods sold and net income for 2013, 2014, and 2015. Cansela’s effective income tax rate is 40%.(Input all amounts as positive values.) |
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Cost of Goods Sold |
Net Income |
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2013 |
by |
by |
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2014 |
by |
by |
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2015 |
by |
by |
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-
Rating:
/5
Solution: Cansela Corporation uses a periodic inventory system and the LIFO