Tamarisk, inc. had the following inventory transactions occur during 2017: units cost/unit feb. 1, 2017 purchase 94 $94 mar. 14, 2017 purchase 161 $98 may 1, 2017 purchase 114 $102 the company sold 265 units at $131 each and has a tax rate of 30%. assuming that a periodic inventory system is used, and operating expenses of $2600, what is the company’s after-tax income using lifo?
a. $4012
b. $3982
c. $5689
d. $5732

Company’s after-tax income using LIFO would be $3,982

Explanation:

Revenues: 265 * $131 = $34,715

To calculate the cost of the units sold using LIFO you have to use the cost of the last purchases.

For this case it would be:

114 units * $102 + 151 units * $ 98 = $26,426

Once we have the gross profit (deducting the cost from the net sales), we have to deduct the expenses to obtain the net profit before taxes.

$34,715 net sales

-

$26,426 LIFO cost of goods

$8,289 gross profit

-

$2,600 expenses

$5,689 net profit before taxes

$1,707 (30% TAX)

$3,982 net income

To have the total income we have to deduct the tax that is calculated mutiplying the net income before tax by the taxe rate.

eds? ederal government or feds