Broadhead Company uses a periodic inventory system. At the end of the annual accounting period, December 31 of the current year, the accounting records provided the following information for product 2: Units Unit Cost
Inventory, December 31, prior year 3,000 $9
For the current year:
Purchase, April 11 9,000 10
Purchase, June 1 7,000 15
Sales ($50 each) 10,000
Operating expenses (excluding
income tax expense) $195,000
Required:
1. Prepare a separate income statement through pretax income that details cost of goods sold for (a) Case A: FIFO and (b) Case B: LIFO.
2. Compute the difference between the pretax income and the ending inventory amount for the two cases.