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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 8,400 units of its only product. The beginning inventory balance of $102,000 consisted of the following layers:
3,900 units at $10 per unit = $ 39,000
4,500 units at $14 per unit = 63,000

total $ 102,000

During the three years 2013-2015 the cost of inventory remained constant at $16 per unit. Unit purchases and sales during these years were as follows:
purchase sales
2013 38500 40000
2014 51000 54000
2015 40500 42000
problem 1: find out cost of goods sold for 2013, 2014, and 2015.
2: Disregarding income tax, determine the LIFO liquidation profit or loss, if any, for each of the three years.

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 30%.

 

Accounting Basics, Accounting

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