Reference no: EM132493516

The management of Felipe 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 2019 if either the FIFO or the LIFO method had been used. For 2019, the accounting records show these data:

Inventories

Purchases and Sales

Beginning (7,000 units) $14,000

Total net sales (180,000 units) $747,000

Ending (17,000 units)

Total cost of goods purchased (190,000 units) 466,000

Purchases were made quarterly as follows.

Quarter                    Units                 Unit Cost                Total Cost

1                           50,000               $2.20                 $110,000

2                           40,000                2.35                    94,000

3                            40,000                2.50                 100,000

4                            60,000                  2.70                 162,000

                                190,000                                    $466,000

• Operating expenses were $130,000, and the company's income tax rate is 40%.

Question 1: Prepare comparative condensed income statements for 2019 under FIFO and LIFO.