Solution-Determine the amount of lifo liquidation profit

Determine the amount of lifo liquidation profit

Reference no: EM131796078

Question - Taylor Corporation has used a periodic inventory system and the LIFO cost method since its inception in 2004. The company began 2011 with the following inventory layers (listed in chronological order of acquisition):

8,500 units @ $15 $ 127,500

16,000 units @ $17 272,000

Beginning inventory $ 399,500

During 2011, 32,500 units were purchased for $27 per unit. Due to unexpected demand for the company's product, 2011 sales totaled 41,000 units at various prices, leaving 16,000 units in ending inventory.

Required:

(1) Calculate cost of goods sold for 2011.

(2) Determine the amount of LIFO liquidation profit that the company must report in a disclosure note to its 2011 financial statements. Assume an income tax rate of 40%.

(3) If the company decided to purchase an additional 41,000 units at $27 per unit at the end of the year, how much income tax currently payable would be saved?

Reference no: EM131796078

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Determine the amount of lifo liquidation profit

Reference no: EM131796078

Reference no: EM131796078

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