Question

The board of directors of Metlock 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.

Sales		20,800	units @	$55
Inventory, January 1		5,600	units @	22
Purchases		6,000	units @	24
		10,100	units @	28
		7,200	units @	33
Inventory, December 31		8,100	units @	?
Operating expenses		$220,000

Prepare a condensed income statement for the year on both bases for comparative purposes.

Metlock Corporation Condensed Income Statement For the year ended December 31
		First-in, first-out				Last-in, first-out
Cost of Goods AvailableCost of Goods SoldDividendsExpensesGross ProfitInventory, Jan. 1Inventory, Dec. 31Net Income / (Loss)Operating ExpensesPurchasesSales RevenueTotal Revenues				$				$
Cost of Goods AvailableCost of Goods SoldDividendsExpensesGross ProfitInventory, Jan. 1Inventory, Dec. 31Net Income / (Loss)Operating ExpensesPurchasesSales RevenueTotal Revenues :
Cost of Goods Available    Cost of Goods Sold    Dividends    Expenses    Gross Profit    Inventory, Jan. 1    Inventory, Dec. 31    Net Income / (Loss)    Operating Expenses    Purchases    Sales Revenue    Total Revenues		$				$
Cost of Goods Available    Cost of Goods Sold    Dividends    Expenses    Gross Profit    Inventory, Jan. 1    Inventory, Dec. 31    Net Income / (Loss)    Operating Expenses    Purchases    Sales Revenue    Total Revenues
Cost of Goods Available    Cost of Goods Sold    Dividends    Expenses    Gross Profit    Inventory, Jan. 1    Inventory, Dec. 31    Net Income / (Loss)    Operating Expenses    Purchases    Sales Revenue    Total Revenues
Cost of Goods Available    Cost of Goods Sold    Dividends    Expenses    Gross Profit    Inventory, Jan. 1    Inventory, Dec. 31    Net Income / (Loss)    Operating Expenses    Purchases    Sales Revenue    Total Revenues
Cost of Goods Available    Cost of Goods Sold    Dividends    Expenses    Gross Profit    Inventory, Jan. 1    Inventory, Dec. 31    Net Income / (Loss)    Operating Expenses    Purchases    Sales Revenue    Total Revenues
Cost of Goods AvailableCost of Goods SoldDividendsExpensesGross ProfitInventory, Jan. 1Inventory, Dec. 31Net Income / (Loss)Operating ExpensesPurchasesSales RevenueTotal Revenues
Cost of Goods AvailableCost of Goods SoldDividendsExpensesGross ProfitInventory, Jan. 1Inventory, Dec. 31Net Income / (Loss)Operating ExpensesPurchasesSales RevenueTotal Revenues
Cost of Goods AvailableCost of Goods SoldDividendsExpensesGross ProfitInventory, Jan. 1Inventory, Dec. 31Net Income / (Loss)Operating ExpensesPurchasesSales RevenueTotal Revenues				$				$

Answer 1

Income Statement
	FIFO	LIFO
Net Sales Revenue	$      1,144,000	$      1,144,000
Cost of Goods Sold
Inventory, Jan 1	$         123,200	$         123,200
Purchases	$         664,400	$         664,400
Cost of Goods Available for Sale	$         787,600	$         787,600
Less Inventory, Dec 31	$         262,800	$         183,200
Cost of Goods Sold	$         524,800	$         604,400
Gross Profit	$         619,200	$         539,600
Operating Expenses	$         220,000	$         220,000
Net Income	$         399,200	$         319,600

Inventory Dec 31 figures can also be entered with negative sign