What is the difference in net income

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Question - In 20X1, Felix Company had sales revenues of S80m (10m units @ $8), all in cash. The beginning of the year inventory value was $20m (4m units @ $5). Purchase during the year was $48m (8m units @ $6). Assume 40% Income tax rate. Based on the above information, answer the following questions.

Required -

1. What is the ending inventory value for 20X1 under 1) FIFO method and 2) LIFO method?

2. What is the Cost of Goods Sold for 20X1 under 1) FIFO method and 2) LIFO method?

3. What is the difference in tax expense for 20X1 between the LIFO and FIFO methods? Which method leads to higher taxes for 20X1?

4. What is the difference in net income for 20X1 between the LIFO and FIFO methods? Which method leads to higher net income for 20X1?

Reference no: EM133137495

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