Larson company employs a periodic inventory system and reported the following inventory information for the month of august: august 1 beginning inventory 2,600 units @ $27 cost per unit august 6 sold 1,100 units august 15 purchased 1,400 units @ $36 cost per unit august 18 sold 1,500 units august 23 purchased 900 units @ $29 cost per unit august 26 purchased 600 units @ $23 cost per unit august 29 sold 2,300 units august 30 purchased 1,500 units @ $40 cost per unit during august, larson company reported operating expenses of $29,000 and had an income tax rate of 39%. using the weighted average method, larson company's gross profit for august totaled $71,050. calculate the amount of net income reported on larson company's income statement for august using the lifo method.

LIFO Method

Income Statement

$ 243,216Sales

-$ 144,300Cost of Goods

-$ 29,000Operating Expenses  

$ 69,916Gross Profit  

$ 69,916Net Income BEFORE Taxes

-$ 27,267  Tax RATE 39%  

$ 42,649Net Income after Taxes

Explanation:

With the LIFO Method of Inventory the Gross Profit it's a little lower than with the Weighted Average Method.

The LIFO method means that the first units that are sold  must be at the cost of the last unit purchased an so on.  

The Cost of Goods it's determined by the last purchases made by the company and the inventory it´s valuated   at the cost of the initial units purchased.

WEIGHTED AVERAGE      

Q      UnitUSD                Dateinventory

$ 2,600$ 27                  August 1Beginning

-$ 1,100$ 27$ 29,700  August 6Sold

$ 1,500$ 27            Subtotal

$ 1,400$ 36                  August 15Purchased

$ 2,900$ 31                    Subtotal

-$ 1,500$ 31  $ 47,017  August 18Sold

$ 1,400$ 31            Subtotal

$ 0,900$ 29                  August 23Purchased

$ 0,600$ 23                        August 26Purchased

$ 2,900$ 29              Subtotal

-$ 2,300$ 29$ 66,448  August 29Sold

$ 0,600$ 29              Subtotal

$ 1,500$ 40                  August 30Purchased

$ 2,100$ 37$ 143,166Subtotal

LIFO    

QUnitDateinventory                        USD

$ 2,600$ 27August 1  Beginning  

-$ 1,100$ 27August 6  Sold        $ 29,700

$ 1,500$ 27                          Subtotal  

$ 1,400$ 36August 15Purchased  

-$ 1,400$ 36August 18Sold        $ 50,400

-$ 0,100$ 27August 18Sold          $ 2,700

$ 1,400$ 27                        Subtotal  

$ 0,900$ 29August 23Purchased  

$ 0,600$ 23August 26Purchased  

-$ 0,600$ 23August 29Sold        $ 13,800

-$ 0,900$ 29August 29Sold          $ 26,100

-$ 0,800$ 27August 29Sold          $ 21,600

$ 0,600$ 27                        Subtotal  

$ 1,500$ 40August 30Purchased  

$ 2,100  Subtotal$ 144,300

answer; the above statement/question is ( true);