Cansela corporation uses a periodic inventory system and

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Reference no: EM13590248

Cansela Corporation uses a periodic inventory system and the LIFO method to value its inventory. The company began 2013 with inventory of 7,900 units of its only product. The beginning inventory balance of $112,800 consisted of the following layers:

3,400 units at $12 per unit

40,800

4,500 units at $16 per unit

72,000

112,800

During the three years 2013-2015 the cost of inventory remained constant at $18 per unit. Unit purchases and sales during these years were as follows:

	Purchases		Sales
2013		31,000		33,000
2014		41,000		43,500
2015		33,000		34,000

Required:

Calculate cost of goods sold for 2013, 2014, and 2015.

Disregarding income tax, determine the LIFO liquidation profit or loss, if any, for each of the three years.

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 45%.

Reference no: EM13590248

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