The management of Blossom Company asks your help in determining the comparative effects of the FIFO and LIFO inventory cost
flow methods. For 2022, the accounting records show these data.
Inventory, January 1 (13,500 units)
$ 47,250
Cost of 125,000 units purchased
488,300
Selling price of 103,000 units sold
788,000
Operating expenses
125,000
Units purchased consisted of 38,000 units at $3.70 on May 10; 59,000 units at $3.90 on August 15; and 28,000 units at $4.20 on
November 20. Income taxes are 26%.
(a) Prepare comparative condensed income statements for 2022 under FIFO and LIFO. (Round answers to 0 decimal places, e.g. 5,125.)
Blossom Company
Condensed Income Statements
For the Year Ended December 31, 2022
FIFO
LIFO
$ 788000
$ 788000
Sales
Cost of Goods Sold
Beginning Inventory
47250
47250
Cost of Goods Purchased
488300
488300
Cost of Goods Available for Sale
535550
535550
Less
Ending Inventory
432250
100900
Cost of Goods Sold
103300
434650
Gross Profit
684700
353350
Operating Expenses
125000
125000
Income before Income Taxes
Income Tax Expense
Net Income/(Loss)
$
$