Mandalay Industries is a private company that sells

electronic test #2764

Mandalay Industries is a private company that sells electronic test equipment. During the year
2013, the inventory records reflected the following:Units Unit Cost Total CostBeginning
Inventory.......... 15..................... $12,000........... $180,000Purchases.......................
40...................... 10,000.............. 400,000Sales (45 units at $25,000 each)To minimize income
taxes, inventory is valued at cost using the LIFO inventory method. OnDecember 28, 2013,
Mandalay's supplier increased the unit cost of new test equipment to $15,000.Required:1.
Determine the company's Income from Operations and the cost of ending inventory. The
company's operating expenses (excluding Cost of Goods Sold) were $300,000 and the
company applies LIFO with a periodic inventory system.2. Mandalay's management is
considering buying 20 additional units on December 31, 2013, at $15,000 each. Redo the
income statement and ending inventory calculations, assuming that this purchase is made on
December 31, 2013.3. How much did Income from Operations change because of the decision
to purchase additional units on December 31, 2013? Is there any evidence of deliberate income
manipulation? Is this tax fraud? Explain.View Solution:
Mandalay Industries is a private company that sells electronic test

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