Reference no: EM131772354

The management of Gresa Inc. is reevaluating the appropriateness of using its present inventory cost flow method, which is average-cost. The company requests your help in determining the results of operations for 2017 if either the FIFO or the LIFO method had been used. For 2017, the accounting records show these data:

Inventories			Purchases and Sales
Beginning (7,000 units)	$14,000	Total net sales (223,000 units)	$992,350
Ending (14,000 units)	Total cost of goods purchased (230,000 units)	572,000

Purchases were made quarterly as follows.

Quarter	Units	Unit Cost	Total Cost
1	60,000	$2.30	$138,000
2	50,000	2.40	120,000
3	50,000	2.50	125,000
4	70,000	2.70	189,000
230,000	$572,000

Operating expenses were $100,000, and the company's income tax rate is 40%.

Prepare comparative condensed income statements for 2017 under FIFO and LIFO.