Carbondale Company Had the Following Data Available for the LastOperating Expenses Are $2,000 Per Month

The Answer is 1. a. FIFO Cost of Goods Sold: 10 × $55 $550 30 × $60 1,800 5 × $65 325 Total Cost of Goods Sold $2,675 b. LIFO Cost of Goods Sold: 25 × $60 $1,500 20 × $65 $1,300 Total Cost of Goods Sold $2,800 2. Difference in Cost of Goods Sold × 30% = Tax Savings ($2,800 - $2,675) × 30% = $37.50

Carbondale Company Had the Following Data Available for the LastOperating Expenses Are $2,000 Per Month

The Answer is 1. a. FIFO Cost of Goods Sold: 10 × $55 $550 30 × $60 1,800 5 × $65 325 Total Cost of Goods Sold $2,675 b. LIFO Cost of Goods Sold: 25 × $60 $1,500 20 × $65 $1,300 Total Cost of Goods Sold $2,800 2. Difference in Cost of Goods Sold × 30% = Tax Savings ($2,800 - $2,675) × 30% = $37.50

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Carbondale Company Had the Following Data Available for the Last

Question 2

Essay

Carbondale Company had the following data available for the last six months:
$\begin{array} { | l | l | l | } \hline \text { Beg, inventory } & 10 \text { units } & \$ 55 \text { per unit } \\\hline \text { Purchase, } 3 / 1 & 30 \text { units } & \$ 60 \text { per unit } \\\hline \text { Sale, } 4 / 1 & 25 \text { units } & \$ 100 \text { per unit } \\\hline \text { Purchase, } 5 / 1 & 25 \text { units } & \$ 65 \text { per unit } \\\hline \text { Sale, } 6 / 1 & 20 \text { units } & \$ 100 \text { per unit } \\\hline\end{array}$
Operating expenses are $2,000 per month. The income tax rate is 30%.
Required:
1. Compute Cost of Goods Sold for the six months ending June 30 using:
a. FIFO perpetual
b. LIFO perpetual
2. How much will the company save in income taxes if they use LIFO instead of FIFO?

Carbondale Company Had the Following Data Available for the Last

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