Note: For Calculating this req, you should calculate purchases first.
Purchased Units = Sale + Closing Inv. - Opening Inv.= 180 + 240 - 200= 220 unitsReq:2:-
Income Statement showing after Tax earning
Sale 648648Less: Cost of Goods SoldOpening Inv. 400400Add: Purchases 528528928928Less: Closing Inv. 488 440 568 360
Net Income before Tax 208 288
Less: Income Tax @ 50% 104144
Net Income after Tax 104 144
Cost assigned to ending inventory
Closing Inventory: 488 568Req:4:-
Comparison of the result of both the companies
Among these two companies, the company which uses the LIFO Method itsincurred cost is higher than theother company and its Gross proit or Net Profit is less then other companyand this company also get thebenefit of Tax bracket, because it will pay tax less than other company.